Thank you, Mr. Chairman.
My name is Richard Gauthier. I am the President and Chief Executive Officer of the Canadian Automobile Dealers Association, commonly known as CADA.
CADA is the national association for franchise automobile dealerships that sell new cars and trucks. Our 3,500 dealers represent a vital sector of Canada's economy. Through our dealers, we are represented in nearly every community in Canada. When you think of our members in your riding, visualize the franchise Ford dealership or the local Honda store. Our members represent all 21 manufacturer brands available in this country.
With me this morning is our chief economist, Michael Hatch. This morning we will outline the key credit issues facing our dealer network in these most challenging times.
The retail automotive sector employs over 140,000 people in Canada and directly contributes a huge portion of its gross domestic product. It might be helpful for me to underline for you as MPs that it is important to know that dealerships are not company stores. Dealers are independent businesses that make significant investments in land, buildings, equipment, and personnel, and provide manufacturers a retail presence in thousands of communities across the country. Dealers do not take vehicles or parts on consignment from their manufacturers. In fact, dealers assume the risk of financing inventory. No manufacturer has the resources to internalize the costs that dealers bear in this regard.
It will come as a shock to no one in this room today that given the huge costs of financing dealer floor plans and operations, which can run into the tens of millions of dollars per store, predictable and accessible credit is the oil in the retail auto industry's motor. In my daily contact with dealers these days from one end of the country to the other, without a doubt the number one problem facing their businesses is deteriorating credit conditions. Our office speaks to literally hundreds of dealers every week, and not a conversation goes by when this issue, above all others, is not raised. This is not only happening to dealers on the brink. It is happening to sound, solvent businesses, often with decades-long relationships with their financial institutions and the very communities represented at this table.
Given what's been happening in credit markets in the past year, I'd like to congratulate the government on the $12 billion Canadian secured credit facility announced in January's budget. CADA communicated the need for just such a facility in the prebudget period, and the government delivered. As parliamentarians, you will know that the easiest part of any program is announcing it. Dealers across the country are still facing tight and unpredictable credit conditions from captive finance companies and chartered banks.
While we recognize the need for diligence in designing any program that allocates tax dollars, we must stress the urgent nature of the problems facing Canada's auto dealers. The government has to find a way to get credit flowing again as soon as possible and get this $12 billion into the real economy now. This program was designed as an economic stimulus, and unlike expenditure measures, the credit facility will provide a profit for taxpayers.
I'd like to thank this committee for its time this morning. I will now cede the floor to Michael Hatch, our economist.