Thank you, Mr. Chairman. Good afternoon, and thank you for the opportunity to appear today on a very important subject before your committee.
My name is Peter MacDonald, and I am chairman of the Canadian Automobile Dealers Association, known as CADA. I am also a new car dealer from Prince Edward Island. With me today, as mentioned, is our chief economist Michael Hatch.
CADA is a national association for franchised automobile dealers that sell new cars and trucks. Our over 3,200 dealers represent a vital sector of the Canadian economy. We represent all brands of vehicles available in Canada, and our dealers employ over 150,000 Canadians. Annually, our member stores sell nearly $120 billion worth of goods and services to Canadian consumers. This number is equal to nearly 6% of the GDP. It also represents more than 20% of the retail sales that happen in Canada every year.
So far in 2018, growth in our industry has been consistent after five straight record years in new car sales. The investments the government made in the auto industry, such as the $13 billion credit facility backstop, have worked and have made the taxpayer a profit. I'm also happy to report that our sector continues to make great strides to deliver more fuel-efficient vehicles than ever to the marketplace, using a mix of new technology and light-weight materials.
Turning to the problem of organized crime, this is an issue of great concern to our members. Our retail locations are too often targeted by the concerted efforts of criminal organizations to steal large numbers of vehicles, often with values totalling millions of dollars. As a national association, we have a long history of co-operation with the government when it comes to cracking down on organized crime. Our team has served as part of the federal government's business network in crime prevention, and worked with the Ministry of Justice on the creation of stolen vehicle legislation that also specifically targeted the trafficking of stolen vehicle parts, and the export of stolen vehicles from Canada.
CADA has surveyed and consistently found that large transactions involving large sums of physical cash are very rare in our sector, and are consistently tracked by current banking practices. Our research indicates that hard cash transactions in excess of $10,000 represent less than 1% of sales. Most importantly, when these types of transactions do take place, they are fully documented at the dealership and at the dealer's financial institutions. For new car sales in total, 92% were financed either through loan or lease last year; of the remaining 8%, only a tiny share were physical cash transactions.
Car dealers are a special breed in the retail landscape. We sell very large ticket items. We have a much smaller number of total transactions than other retail stores that sell a greater volume of smaller goods and services. Between the manufacturer and the dealer, and between the dealer and the customer, there is extensive documentation of all new vehicle transactions that take place in Canada, and how these transactions are financed. Because of this, extensive tracking of inventory to purchaser, any cash transaction over the current $10,000 amount is already captured by the bank.
A very straightforward but rare example would be that of a customer who buys a vehicle and pays cash. That vehicle would then be tracked as leaving the inventory, and the bank or the financial institution providing floor plan financing would be alerted to the fact that the car was sold. From there the cash deposit for the car would also be reported and tracked by the bank upon deposit. Dealerships that would avoid this reporting process risk the cancellation of their franchise agreement—a risk greater than a simple fine. That said, as strong corporate citizens, CADA and its members are ready to co-operate with the government with regard to the documentation of these transactions, however rare they may be.
CADA would like to recommend that it is worth pausing and ensuring that any new regulations will actually deliver results before targeting new sectors of the economy. As stated earlier, CADA is ready to co-operate with this committee and the government on any initiative that makes life harder for criminal organizations. Our record on these issues is clear and will not waver.
Thank you for your time. Mr. Hatch and I will be more than happy to respond to any questions later. Thank you.