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View Full Version : Canada’s new levy can add $4,000 to price of SUVs.


xcel
03-21-2007, 05:50 AM
Fuel-efficient cars get big discounts. (http://www.theglobeandmail.com/servlet/story/RTGAM.20070319.wbudgetenvironment/BNStory/Front)

http://www.cleanmpg.com/photos/data/501/07_Corolla.jpgBill Curry and Greg Keenan - Globe and Mail - Mar. 20, 2007

Buy a Corolla, get $1,000 back!

OTTAWA - Canadians are being enticed out of their H3 Hummers and into Toyota Prius’ as part of a surprise new "green levy" introduced in the federal budget.

A fee of up to $4,000 will be added to the price of gas-guzzling SUVs and supercharged sports cars to pay for new incentives aimed at getting Canadians behind the wheel of new hybrid cars or other fuel-efficient vehicles.

The incentives would be worth up to $2,000 and can be combined with similar offers by several provinces, reducing the purchase cost of hybrids by as much as $4,000.

The measure steals a page from the Green Party's platform, and combined with incentives for renewable-fuel production, it makes vehicle emissions the top target of Ottawa's environmental spending plan.

Although environmentalists welcomed the rebates for hybrids, they criticized the budget yesterday for falling well short of the "massive scale-up" of climate-change efforts that former environment commissioner Johanne Gélinas called for last September.

The Conservative budget contains more than $4-billion over seven years for environmental issues, including incentives for domestic ethanol production and protection for Canadian lakes and forests.

Half of that money follows the government's announcement last year that 5 per cent of all gasoline sold in Canada must be from renewable sources such as ethanol by 2010. Two per cent of all diesel must also be from renewable sources.

But environmentalists note that the $2-billion is not new money, because it is being paid for by ending an existing tax break for ethanol.

"If you want to subsidize corn producers, that's fine, but it's barely an environmental program," said Aaron Freeman of Environmental Defence.

Environmentalists argue the budget does not qualify as a climate-change plan because it makes no mention of how many megatonnes of greenhouse gases would be reduced as a result of the new spending. That criticism was shared by the NDP and Liberal environment critic David McGuinty, who said the green levy is another name for a carbon tax -- something Conservatives have said they oppose.

The green levy on fuel-inefficient vehicles will not apply to pickup trucks, thereby avoiding a backlash from rural Canada. Finance officials said it would be unfair to penalize pickups because many Canadians require them for work.

Some industry officials said they have told Ottawa for years that the combined scheme of rebates for fuel-sippers and penalties for gas-guzzlers is the wrong approach.

One key reason is that fuel-efficient vehicles are already extremely popular in Canada, which means rebates on fuel-efficient vehicles won't have much of an impact.

More than 50 per cent of the 1.6 million vehicles purchased in Canada last year were in the subcompact and compact car segments, said industry analyst Dennis DesRosiers.

"These are people who are already doing their bit," said Mark Nantais, president of the Canadian Vehicle Manufacturers Association, which represents DaimlerChrysler, Ford and General Motors.

However, Toyota Canada, which has been a leader in hybrid technology, issued a statement applauding the budget.

In addition, the budget's environmental spending includes:

The already announced $1.5-billion EcoTrust, which funds projects jointly with the provinces to reduce greenhouse-gas emissions;.

The previously announced $250-million Natural Areas Conservation Program, which encourages the private sector to protect ecologically sensitive lands.;

$110-million to protect the habitat of species at risk;

$93-million for a national water strategy, which includes cleanup projects for the Great Lakes, Lake Simcoe and Lake Winnipeg, and fisheries research.

3

Number of vehicle models eligible for the full $2,000 fuel-consumption rebate.

$4,000

The extra levy new-car drivers will pay for autos with the worst fuel-efficiency ratings.

100

The number of new environmental enforcement officers, bringing the total to 300.

"It a milestone day obviously for people who are in the biofuels industry, but also for farmers and the environment"

KORY TENECYKE, EXECUTIVE DIRECTOR OF THE CANADIAN RENEWABLE FUELS ASSOCIATIONS

"The are making it look like they are doing something when they aren't doing much. They are letting all the horses out, and then they're going to close the corral.

JOHN BENNET, CLIMATE ACTION NETWORK

"From a purely UTS perspective, this is not catastrophic and it certainly doesn't affect the viability of our oil-sands business going forward.

WILL ROACH, CEO OF UTS ENERGY CORP.

Green machines

An illustrative list of 2007 model fuel-efficient vehicles that will be eligible for a rebate as part of a program to promote cleaner transportation.

Vehicle Make and Model|Fuel consumption* Litres/100km|Rebate
Toyota Prius 1.5L, 4 Cyl, regular gasoline|4.1|$2,000
Honda Civic Hybrid 1.3L, 4 Cyl, regular gasoline|4.5|$2,000
Toyota Corolla 1.8L, 4 Cyl, regular gasoline, 5-speed manual|6.3|$1,000
Mini Cooper M6 1.6L, 4 Cyl, regular gasoline, 6-speed manual|6.5|$1,000
Ford Escape HEV 4x4 2.3L, 4 Cyl, regular gasoline, CVT|7.4|$2,000
Saturn Vue Hybrid 2.4L, 4 Cyl, regular gasoline, 4-speed automatic|7.9|$1,000
Jeep Patriot 2.4L, 4 Cyl, regular gasoline, 5-speed manual|8.2|$1,000
Chevrolet Impala 3.5L, 6 Cyl, E85** Flex Fuel Vehicle|12.3|$1,000
Chrysler Sebring 2.7L, 6 Cyl, E85** Flex Fuel Vehicle|13.0|$1,000
*Based on 55 per cent city/45 per cent highway fuel-consumption rating.
**Engine that uses fuel that contains up to 85% ethanol.

SOURCE: DEPARTMENT OF FINANCE

Guzzler's levy

A sampling of 2007 model vehicles that would be subject to a green surcharge. The rate increases as the number of litres per 100 km rises.

Vehicle Make and Model|Fuel consumption* Litres/100km|Surcharge
Nissan Pathfinder|13.1|$1,000
Dodge Durango|14.1|$2,000
Jeep Grand Cherokee SRT8|16.9|$4,000
*Based on 55 per cent city/45 per cent highway fuel-consumption rating.

SOURCE: DEPARTMENT OF FINANCE

Pay up or paid back

New cars with a combined fuel consumption rating of 6.5 l/100 km or less, and minivans, SUVs and other light trucks with a rating of 8.3 l/100 km or less will also be eligible for rebates. And a green levy will be imposed on new passenger vehicles (excluding trucks) with fuel efficiency ratings of 13 l/100 km or more, to be paid by the manufacturer or importer when cars are delivered to the Canadian market.

Thanks Jared!

MetroMPG
03-21-2007, 09:34 AM
I like that this program rewards efficiency, not just technology (i.e., not just hybrids).

I really like this: the new rebate just made a new base Yaris cheaper than a new base Aveo.

The ridiculously underperforming (FE-wise) Aveo has been as popular here as in the US since it was introduced, primarily because it's one of the cheapest cars on the market. I sincerely hope this tilts the balance of sales further towards the much more efficient Yaris - even though Canadians already buy lots of them (in Feb, we bought 3x more Yari per capita than in the US.)

Toyota Yaris

MSRP before rebate:

(All figures $CDN)

$13,800 - base 3-door hatch
$14,995 - base 5-door hatch

5-spd: 6.3 L/100 km (37.3 mpg US) combined (55city/45 hwy - Transport Canada)

source: http://www.toyota.ca/cgi-bin/WebObjects/WWW.woa/15/wo/Home.Vehicles.Go.YarisHatchback-tTql0ArBhm6saamVfnaN0w/12.11?v124060e%2ehtml

After rebate:

$12,800 - base 3-door hatch
$13,995 - base 5-door hatch

Chevrolet Aveo

MSRP - (doesn't qualify for rebate)

$12,995 - base 5-door hatch

5-spd: 7.5 L/100 km (31.4 mpg US) combined (55city/45 hwy - Transport Canada)

source: http://gm.ca/english/vehicles/chevrolet/aveo/index.jsp

I really hope this program spurs manufacturers to tweak their models to make them more efficient for this market. Honda's Fit misses eligibility for the $1K rebate by just 0.1 L/100 km. Honda could easily bump the Fit into rebate territory with a cheap & easy transmission option (taller final drive, or 5th gear ratio). This would be appropriate, given a common theme amongst FE aware Fit owners is that the gearing is too low - Honda went for "sporty" rather than efficient in their decision on ratios.

I'll be watching the manufacturers closely to see if there's a constructive response...

(Of course what the article neglects to mention is the budget containing the rebates/levy hasn't been passed yet, and nothing is certain in a minority parliament. While there is theoretically enough support for the budget vote, the current government may yet fall over environmental legislation currently under debate.)

psyshack
03-21-2007, 12:15 PM
What BS.

If you drive a large car or truck your already paying much more in fuel tax. The goverments of the world should use the tax they already collect wisely. I will be all over my rep/sen if they try and do something retared like that. As it is they already know that Im very upset with the hybrid credits and such none sense.

psy

Dan
03-21-2007, 01:03 PM
I wouldn't be surprised if the Big 3 now lobby Canada to convince them that the new H3 is really a truck because it can tow a flatbed, and as such should be excluded from the tax.

11011011

AshenGrey
03-21-2007, 03:33 PM
I like this plan a lot!

If I could call the shots, here's what I'd write:

-- 50 MPG or higher: $3,000
-- 40 to 49 MPG: $2,000
-- 35 to 39 MPG: $1,000
-- 25 to 34 MPG: $ 0
-- 20 to 24 MPG: Pay $1,000
-- 16 to 19 MPG: Pay $3,000
-- 12 to 15 MPG: Pay $5,000
-- 11 or less: Pay $10,000

Special Hummer surcharge: $ 2,500

Chuck
03-21-2007, 04:20 PM
For those who think a right-wing government can't do this - take note.

MetroMPG
03-21-2007, 05:27 PM
For those who think a right-wing government can't do this - take note.

Perhaps you noted that the current Conservative prime minister, whose government delivered this program, comes directly from "oil patch" Alberta.

Reading the news today, it's clear this was totally unexpected by the conservative constituency, to say the least. "Broadsided" was a word I read more than a few times.

--

The more I think about this, the more I think that Canadians may see some action from manufacturers in the entry-level segment of the market - because it's arguably the most price sensitive.

Toyota Canada said (today) that as a result of the rebates, it is revising sales projections (http://www.thestar.com/News/article/193660) for the already hot Yaris (along with other models). The Yaris is among the top-5 selling cars here.

I did a little research on the Chevy Aveo. Its Korean-made European/Asian market equivalents can be had with a range of four 4-cyl engines, from 1.2 - 1.6 L. (Of course only the 1.6L is available to North Americans.) I would expect that product planners at GM Canada today were seriously looking at their options. The Aveo is partly responsible for GM's recapturing 1/5th of the entry level market here. It was lower than that prior to the car's introduction, and I'm sure there is serious concern about market share today. Hopefully this provokes a constructive response.

Most other manufacturers who serve the econo-box market have more efficient drive train options in EurAsia that are not offered here. Yet.

This will be interesting to watch.

Chuck
03-21-2007, 08:36 PM
I'm aware that PM Stephen Harper has been accused by opponents during his election as another GWB.

The Wikapedia article gives an interstging mention of the National Energy Program (http://en.wikipedia.org/wiki/National_Energy_Program) in Canada. In the 1970's, there was a similar friction in the US between oil patch states (Texas, Oklahoma, Louisana) and the East Coast. The oil patch felt like they had their profits overly taxed and regulated - the East Coast thought they were being taken advantage of.

xcel
03-22-2007, 12:50 AM
Hi All:

___And more fallout from this blockbuster …

**************************************************************************

Canadian 'incentives' will hit U.S. automakers, analysts say. (http://www.detroitnews.com/apps/pbcs.dll/article?AID=/20070321/UPDATE/703210423/1148/AUTO01)

Detroit News - Mar. 21, 2007

TORONTO -- Federal incentives to encourage a shift from gas-guzzling SUVs to fuel-efficient "green cars" could hurt struggling North American automakers by keeping some drivers out of the marketplace without significantly boosting sales of gasoline-electric hybrid cars, industry watchers say.

Auto analyst Dennis DesRosiers said Tuesday the Canadian government should be concerned with how automakers might react to its budget plan, which favors hybrid cars with a rebate of up to $2,000 on the purchase but puts a $4,000 tax on SUVs and other vehicles that use large amounts of fuel.

"If I was General Motors, Ford and Chrysler, I'd be real (upset). Right now, these companies are in real sensitive mode in terms of their very survival," DesRosiers said.

"Key decisions are being made in their head office boardrooms in terms of plans of what to keep open, what plants to close and where to put their investments. And what does the federal government do? They send a bomb -- a missile -- into these boardrooms saying we're going to put a $4,000 tax on your most profitable vehicles," he said.

DesRosiers suggested consumers will find other ways to acquire an SUV, if they really want to make the purchase, such as buying used -- an area that isn't covered by the incentive plan -- or traveling stateside to make a purchase.

The taxes "don't deter consumers from buying these kinds of vehicles, mainly because you can drive a large SUV through the loopholes in them."

Ontario Premier Dalton McGuinty applauded the hybrid incentive, saying manufacturers have to help protect the environment by curbing greenhouse gas emissions, despite any short-term effect on the province's huge manufacturing operations.

Ontario and some other provinces already have existing incentive programs that double rebates when a hybrid vehicle is bought.

McGuinty said he wants to work with the Canadian auto industry -- heavily concentrated in Ontario -- so it is producing products and models that are more environmentally friendly.

Toyota Motor Corp., which has been a longtime supporter of hybrid vehicles but doesn't plan to make any in Canada, also lauded the incentives plan.

"Toyota has long believed that the global automotive industry must take real measures to make things better for the planet," Toyota Canada managing director Stephen Beatty said in a release.

Toyota plans to open a new plant in Woodstock, Ont., next year to make the RAV-4 mini sports utility vehicle.

Chris Johnsen, Canadian automotive leader at Deloitte & Touche consultants, said automakers were unlikely to shift hybrid manufacturing to Canada in response to the new incentives. He added that he's skeptical of how much impact the entire program will have on consumer spending.

"The incentive, while it certainly causes people to take notice, won't shift consumer buying," he said.

"A consumer up in northern Ontario, for example, would have very little benefit buying a hybrid. Where they make a huge impact is in big-city driving, stop-and-go in places like Vancouver or Montreal."

DesRosiers added that even if the tax incentives did affect sales, the Canadian SUV market is too small to make a lasting impression on climate change.

"I respect that people who buy one of those big gas-guzzlers potentially should be a target, but last year in Canada there were 15,000 (SUVs sold) and that's it."

He said a major effect would be felt if Canadians started to sneak through the taxation loopholes, sending auto sales downward.
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___Good Luck

___Wayne

Chuck
03-22-2007, 10:10 AM
Why do I get the impression that some want these bling-bling gas guzzlers like food and sex?

No, I'm not talking about construction people, etc...



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