Mr. Chairman and honourable members, thank you for the opportunity to appear before you today, and a special thank you to Mr. Watson and Mr. Godfrey for their role in securing my attendance before the committee today.
Our belief is that it's important to hear from our side of the industry as well, because in terms of regulating the automotive industry we are looking at a product compliance issue, not a stationary source issue, as we are in other industries.
By way of background, in 2006 the 13 members of the Association of International Automobile Manufacturers of Canada, who come from Europe, Korea, and Japan, sold over 733,000 new vehicles in Canada, representing 45.5% of Canada's new vehicle market. Additionally, our members sold 61% of all passenger cars in Canada, with fully 50.5% of all sales to consumers.
While our member sales have grown, so has their Canadian investment and employment commitment, with fully 77,000 direct and indirect jobs responsible from our members' involvement in the Canadian economy.
Our members have invested over $6 billion in manufacturing facilities alone. Annual production reached a record of 900,839 new vehicles in 2006, with over 697,000 of those, or 77%, being exported out of the country.
Importantly, a higher percentage of our members' products built in Canada are also sold to Canadians. For instance, 56% of the vehicles that are built at Honda of Canada manufacturing are sold to Canadians. Fully 84% of the vehicles sold in North America by Honda are built in North America by Honda.
On CAC emissions and greenhouse gas emissions, even though the number of vehicles on our roadways will continue to increase, as pointed out by Mr. Nantais earlier, cleaner vehicles will be replacing older vehicles, allowing smog-causing emissions to drop from 9.5% in 2005 down to less than 5% in 2015.
On greenhouse gas emissions, 12.6% of all greenhouse gas emissions arise from the 18.7 million vehicles on the road.
Much of the success enjoyed by the AMC member companies in the marketplace can be attributed to the fact that these companies focus on producing and marketing both affordable and premium fuel-efficient vehicles, incorporating the latest advanced technologies, resulting in reductions in greenhouse gas and smog-causing emissions. Indeed, AIAMC member companies were award winners in eight of ten categories in the EnerGuide Awards for fuel efficiency.
They also continue to research and introduce hybrid technologies, advanced diesel technologies, fuel cell technologies, direct injection technologies for both gas and diesel vehicles, alternative fuel technologies, and the application of lightweight materials, among others, with the goal of reducing the impact of the motor vehicle on the environment.
The proposal under Bill C-30 is to amend and promulgate the Motor Vehicle Fuel Consumption Standards Act. The members of the AIAMC have a demonstrated commitment to providing consumers with vehicle technologies that have delivered real-world fuel efficiency improvements, with attendant reductions in greenhouse gas emissions. Our commitment in this regard will continue.
However, some advanced vehicle technologies are more costly to incorporate into vehicles, and incentives to offset these technology premiums should be considered by government, while being as technology neutral in their application as possible.
Regardless of the employment of any of these new technologies in new motor vehicles--the vehicles subject to regulation--as pointed out by Mr. Hargrove and Mr. Nantais, this will address only 1% of Canada's greenhouse gas emissions. Therefore, in order to address significant emission reductions from the remaining 99% of emissions from the on-road light-duty fleet, other policy levers or incentives need to be exercised.
I'd like to talk about fuel quality for a moment. The quality of Canadian fuels has been a longstanding concern to the automotive industry. While tailpipe emissions from the vehicle are being regulated to increasingly stringent standards, there is no nationally regulated standard for the quality of fuels. Therefore, while vehicle manufacturers are required by regulation to provide a lifetime emissions control performance, there is no federally regulated fuel quality standard pertaining to the fuel that is burned in these vehicles to support the regulation of the vehicle's hardware. The regulation of fuels will benefit not only the introduction of advanced technologies but will also be a significant contributor to the reduction of emissions from the entire on-road fleet.
The lack of high-quality diesel fuel is inhibiting the introduction of advanced diesel engine technology, which has a potential to lever significant GHG emissions benefits.
The use of alternative lower-carbon-content fuels such as liquid propane gas and compressed natural gas and renewable fuels such as ethanol and biodiesel is an important factor in achieving significant life cycle reductions in greenhouse gas emissions. In this regard, the AIAMC members are supportive of the government's renewable fuels mandate that would require fuel producers and importers to have an average annual renewable fuel content of at least 5% of the volume of gasoline that they produce or import beginning in 2010, with a 2% renewable content for diesel following 2012.
The notice of intent pertaining to Bill C-30 appears to contemplate a systems approach to the regulation of Canadian fuel, vehicle, and engine air pollutant regulations in alignment with the U.S. standards. Whether in reference to renewable fuels or traditional carbon-based fuels, national federally regulated fuel standards should be an important objective of the proposed Clean Air Act.
In our view, it is inexcusable that the notice of intent with respect to Canada's renewable fuels mandate on December 30, 2006, suggests that fuel quality issues are best left to private industry rather than imposing these specifications through regulation.
In summary, unlike many of the other sectors addressed in the climate change debate, our industry is a consumer-facing one. Emissions from our products are both the function of technology and consumer choice, factored by vehicle kilometres travelled. As a result, to be effective, government policy must address all of the variables. This leads to issues not only of regulating the product but influencing consumer behaviour through fuel prices, vehicle choice and use, and other alternatives.
Canada also cannot ignore the fact that its automotive industry is integrated on a North American basis with respect to both vehicle manufacturing and vehicle sales. With a Canadian sales market of just over 8% of the entire North American market, unique fuel consumption regulations and an integrated production and sales market are problematic.
Discussions with the government to date pertaining to the regulation of the automotive sector have confirmed that the regulatory approach in Canada will be consistent with that of the United States, so as to allow manufacturers to continue to produce and sell vehicles for the integrated North American market.
A fuel economy regulation for Canada that is aligned with that of the United States provides the least disruption in the marketplace and best balances consumers' purchasing requirements pertaining to vehicle utility, vehicle safety, fuel economy, and emissions. Regulation in Canada linked to the U.S. reformed CAFE would have the effect of imposing a more aggressive standard, given the smaller size of the Canadian fleet.
Those are my remarks. Thank you very much.