Thank you, Mr. Chairman. I promise not to use his five minutes as well.
I'd like to thank you and your colleagues for offering me the opportunity to address the committee. At Toyota we believe it's very important in these uncertain times to maintain a dialogue with Canadians, and clearly the committee plays an important role in that regard.
Mr. Chairman, the dollar's strong performance this autumn has created many challenges for all Canadian manufacturers, and Toyota is certainly no exception. In the face of a rapidly escalating loonie, Canadians have made it clear that they're looking for pricing equality with our neighbours to the south.
Toyota is a global company, but we firmly believe in building vehicles where they're sold, and I'm pleased to say that Toyota has invested billions of dollars in Canadian manufacturing facilities to build vehicles not only for our Canadian customers but for the North American market as a whole.
By building our most popular models here in Canada, Toyota was able to shield Canadian consumers from the impact of the dollar's slide in the early part of the decade and build export sales to the United States. Now, however, we're challenged to find ways to improve our offers to both our American and Canadian customers while remaining profitable.
Certainly, we pledge to respond in ways that are viable in the Canadian regulatory economic context that are meaningful to current and future customers and are respectful of our employees.
It may be stating the obvious to say that manufacturing starts with sales, but I think it's important to remember that without a market, there's no reason to build a product. It's also worth repeating that customers are driven by value, whether shopping for a book or a car. I mention books because with both Canadian and U.S. prices printed on their covers, books have become symbolic of pricing disparity.
I can't speak for the publishing industry, but I think there is some parallel with automobiles insofar as consumers look at vehicles bearing the same name in Canada and the U.S., see pricing differences in advertising on the Internet or other media, and feel they aren't getting a fair deal. As the old saying goes, “You can't judge a book by its cover”.
All vehicles that we build for sale in the Canadian market, as distinct from the American market, are equipped with features mandated by federal regulatory requirements--indeed, some that are not required by our U.S. counterparts. Other Canadian vehicle features, again as distinct from those American cars, relate to choices we make as a distributor based on a variety of factors, from what survives a Canadian winter to what has proven popular with our customers in the past.
Dollar parity has resulted in a new conversation with consumers to highlight the many differences between Canadian and U.S. products. We need to examine how best to minimize these, whether by truly harmonizing regulatory standards across North America or by changing standard features to make Canadian and American vehicles more directly comparable. I can report that we are responding on both fronts.
We're repositioning the prices and features of our vehicles that are popular with Canadians. We're offering a variety of financing lease rates. We're providing additional value through complementary service, gas cards, cash equivalents, and other programs. As we've done for the past 40 years, we're going to continue to monitor the market and adjust our operations, our products and services, to ensure best value for our Canadian drivers.
Now, Canadian companies are good at being successful despite a relatively small domestic market. But we're more successful when we're operating in a favourable economic environment, and this is something in which the federal government plays a key role.
Toyota Canada would like to suggest three ways in which the government can help. First, there's support for capital investment. Every time Toyota retools for a new model, it must invest hundreds of millions of dollars in equipment and technology. Out-of-date plants, clearly, are less productive, and American policy makers are keenly aware of this. As one example, in the state of Kentucky there's an incentive for this very type of investment.
Second, there are people. We must continually train our people to improve processes and enhance productivity, and there are almost no incentives or programs to support this effort in Canada. Support for technology investment and people development would help Canada compete more effectively with other countries.
Third, as you've already heard from my colleague, Dave Adams, inconsistent Canadian regulatory requirements and other policies that burden Canadian consumers should be removed to encourage consumers to buy Canadian. I've already mentioned disharmonious vehicle standards, but that's not the only reason why Canadians must pay more for vehicles. For example, subcompact cars are not built in North America, but both Canada and the U.S. apply duties on imports of these vehicles. Why any duties should apply is a perplexing question, but it's particularly perplexing that in Canada, a market that demands small cars, the duty is 6.1% while the U.S. limits its tariff to 2.5%.
In summary, we're making adjustments across all of our Canadian operations to ensure that Toyota is able to provide competitive pricing and features for our customers across North America. Governments can help us by pursuing economic and fiscal strategies that will restore stability to the marketplace, eliminate unnecessary costs through regulatory and tariff harmonization, and by assisting automakers to retool and retrain for added productivity.
I look forward to discussing these proposals with you and would be pleased to answer any questions you have.
Thank you, Mr. Chairman.