Thank you.
Let me start by addressing some consumer issues. We must not let current market conditions facing manufacturers and dealers distract consumers from the fact that it's a very good time to buy a car in Canada. In fact, the two sides of the situation are closely related. Cars have not been as affordable in a generation as they are today. Statistics Canada has reported that the price to buy or lease a car has declined to its lowest point in 24 years in its ratio to personal disposable income.
In 2008 it took on average 18.2 weeks of pre-tax income to purchase a new vehicle in Canada, versus 21.5 weeks in the United States. Add this to the fact that all manufacturers are aggressively seeking new business and the end result is a very favourable set of conditions for consumers in the marketplace. Quite simply, there has never been a better time for consumers to enter the market.
That said, it was during the fall of last year that we first started hearing on an almost daily basis that tighter credit was becoming a serious threat to the retail car business in Canada. Not coincidentally, this is when sales started to drop.
We understand that the deterioration in credit conditions is not the only thing putting downward pressure on sales. There are also the forces of increased unemployment and depressed consumer confidence. However, a tightening of the finance screws is putting in doubt the ability of hundreds of our members to finance future sales. Dealers are being held hostage and are being forced to deal, with little or no warning, with unjustified hikes in their rates that are counted in the hundreds of basis points, while at the same time the Bank of Canada rate is approaching zero.
On credit lines often worth tens of millions of dollars, these hikes can mean the difference between survival and the closing of doors in times like these. As Mr. Gauthier said, this is happening to dealers who are solvent and have rock-solid repayment histories and long-standing relationships with their communities and financiers.
The dual effect of tighter credit and decreased sales is a devastating combination for our dealers. As you all know, we need a way to stimulate the economy and improve consumer confidence. There is no better way to do this than to provide incentives for new car sales. The most powerful way to do this is to design a robust vehicle scrappage program. The current one, worth just $300 per vehicle, does not provide enough incentive to get any old cars off the road other than those that would be retired through natural attrition.
We believe a scrappage program worth no less than $3,000 for the replacement of very old cars with new ones would provide a powerful kickstart to sales when it is needed most and would help achieve important environmental objectives.
Thank you very much. We'll now take your questions.