Thank you, Mr. Chair and committee members.
I'm not going to cover a lot of ground.
Mazda Canada is based in Toronto. We have offices in Montreal and Vancouver. We have a warehouse in Toronto. We have 164 dealers across the nation and we employ over 6,000 directly.
We've talked a lot about the declining industry, but I think one of the greater concerns we have right now is the speed at which this decline is taking place. If you look at what happened in the United States, you'll see that the decline started in December of 2007 and was half a per cent. It took seven months before it became a 25% reduction. The decline in Canada started in November. We reached a 28% decline in four months.
The United States is now down 41%, and I believe it's possible, if we don't take action quickly, given the speed at which this change is occurring, that we could also see declines at that same level. We are seeing members in this industry already taking declines at that level.
Another trend that's concerning us is the credit, which is contributing to the speed of this decline. The costs of our funds, despite the best actions that we've given to the banks, are going up. Right now, the funds that we acquire to lend out to customers in APR financing have, in the last 30 days, increased 50 basis points. The cost of funds for leasing has gone up almost 100 basis points in 30 days.
Now, these trends haven't affected the industry yet. These are things that have happened, but that haven't yet flowed through to the consumer side, so we anticipate more challenges in the very near future as the cost of credit goes up.
Leasing is a particular concern. If you take a look at the trends, a year ago we were leasing 43% of all car transactions in Canada. Forty-three per cent of cars were being leased. Today it's 19%. That's a 24-point reduction in the number of leases that are taking place. If you annualize that out over the number of car sales, that's over 390,000 car sales. The decline in our industry isn't that big.
There is a correlation between the decline in leasing and the decline in our industry. No, it's not the only problem, but it is a problem that the secured credit facility needs to be aware of and needs to address through securitization and through this additional focus on making sure we have as many competitive options as possible in the marketplace to secure leasing. What leasing does is provide our consumers an option for a lower payment. When you take that lower payment out of the marketplace, there isn't another option, unless they're going to go for 10- to 12-year finance terms, which doesn't make any sense.
For Mazda, this is particularly important in the province of Quebec. We were doing over 50% leasing. But because there are very few options available and the rates are becoming more and more expensive, that option is becoming less and less available to consumers. Yes, you'll hear that there is credit available, but at what cost? As the price of credit goes up and as the options on leasing disappear, the number of customers we can attract into our showrooms begins to go down. As that goes down, so goes our industry.
So one of our concerns is to keep an eye on the need and make sure there's ample credit, not just for the standard APR, but also for the leasing, which was such a big part of our industry less than a year ago.
Finally, I'm representing a lot of dealers across the country who are also having problems with financing and tight credit situations. Right now, we're seeing dealers who are fortunate enough to have flooring lines. Dealers don't buy the cars. They go out and they finance the cars that you see in the showrooms. If they're fortunate enough to have those flooring lines, their rates are going up. Our dealers' rates on their floor plan, over the last 60 days, have gone up 50 basis points. That means every car out there is costing them more to hold onto. That, coupled with the additional expense of financing the cars, is translating into higher prices for consumers, which is making our cars less affordable and is driving fewer customers into the showroom.
On behalf of the dealers, we also have to make sure that they have ample credit opportunities through our banking systems to provide competitive flooring, competitive construction, competitive flooring lines, and as well, ultimately the consumer financing they need to run their businesses.
Unlike the United States dealership groups, which in many cases are that—they're groups, large corporations—none of ours in Canada, for Mazda, are corporations. They're family owned businesses, small businesses, and many of them are owned by second- and third-generation people who have inherited these businesses and are just trying to keep them afloat right now.
It's hard enough, with the industry going down, to not have the credit available to buy cars from the factory, to floor the cars, to finish their construction projects, to add an additional service bay. When I talk about the tightening of credit, I want to make sure that we've kept in mind the needs of our dealer body—not just Mazda's, but those of every manufacturer out there—and the struggles they're having.
That concludes my remarks, other than to say that I appreciate all that has been done and the efforts you're making in having us here tonight. I know you're putting in a lot of late night hours.
But the industry is moving in the wrong direction, quickly. I believe that with the right actions made promptly, we can turn this around. The industry is sick, but it is not terminal.
I thank you for your time.