Efficiency Program Drives Pickup Truck Sales Higher in Canada
A Canadian government program meant to encourage the buying of fuel efficient vehicles, like hybrids and small cars, has also increased sales of pickup trucks.
Pickups are exempt from Canada's 5-month old 'eco-AUTO' initiative, which uses 'feebates' to reward or punish buyers depending on a vehicle's fuel economy. The reason for the exclusion is that Canada's federal government considers most pickups to be work vehicles purchased out of necessity rather than voluntarily by consumers.
The green-vehicle effort provides government-funded rebates up to $2,000 CAD ($1,865 USD) for light trucks that achieve an average fuel economy of 8.3-liters per 1,000-kilometers (28-mpg) but hits gas guzzlers, like full size sport utility vehicles, with a tax penalty of up to $4,000 CAD ($3,729 USD) tacked onto the purchase price. This has motivated SUV shoppers to opt for a pickup truck instead.
"Leave a loophole and consumers and dealers will exploit it. [Pickups] provide all the utility of a large SUV and are not a major compromise on 'personal use' applications," says Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc., based in Richmond Hill, Ontario.
According to DesRosiers, in a recently released report, eco-AUTO has reversed a prior, several-year downward trend in light truck sales since being passed as part of Canada's national budget in March 2007.
Canadian sales of light trucks - pickups and SUVs - have increased by 8.3% for the first seven months of 2007 over the same period last year. But the sales benefit for pickups becomes clear when light trucks are broken out by segment. Compact and midsize pickup sales are up 18%, while big SUV sales have declined by nearly the same amount - 18.2%.
Mr. DesRosiers thinks the entire eco-AUTO program should be scrapped in favor of an increase in Canada's fuel taxes to encourage conservation.