Auto dealers call for government help

The industry group representing Canada's automobile dealers said Canadian politicians must take immediate steps to increase liquidity in the car markets.

"Predictable and acceptable credit is the oil in the auto industry's engine," said Richard Gauthier, president of the Canadian Automobile Dealers Association, during a press conference Friday in Ottawa.

"Any effort by government to support the banking sector must also be accompanied by a strong message to the banks that they must continue to support small, sound business," he said.

Ottawa is weighing whether to give the Canadian arms of the domestic big three automakers — General Motors, Ford and Chrysler — some form of financial aid.

The dealers association, which has about 3,500 members, said even though Ottawa has pumped cash into the banking system, they are seeing fallout from the credit crunch showing up on car lots.

"We are seeing business-to-business transactions, the financing that dealers receive, dry up," said Huw Williams, the director of public affairs for the car dealers association. "We are not seeing consumer financing drive up.

"The calls come in every day from multiple dealers across the country expressing their problems with financing deals that were acceptable before this crisis took place that are now out the window," Williams said.

Mayors urge action

On the same day the auto dealers made their plea, the mayors of 30 Ontario municipalities gathered in Toronto to discuss the fallout from the crisis gripping the auto sector.

John Gray, mayor of Oshawa, told CBC News that the cost to the cities will be huge if there is a business failure in Canada's auto sector.

"For us to sustain, basically, about a 20 per cent drop in tax levy funding, I mean, that's huge," he said. "How do you go to the property tax base on that one?

"So we're going to need assistance there, we're going to need assistance on trying to meet the social welfare. We alone couldn't possibily fund training programs to get these people retrained. There has to be a massive infusion to develop the skills these people need for the 21st century."

The mayors stressed that Canadian governments should come up with an auto sector bailout plan now, and not wait for U.S. politicians to decide whether to help the Detroit Big Three.

"We want the federal government to make this a key priority," said London, Ont., mayor Anne Marie DeCicco-Best, adding that if the U.S. government does come up with a solution, it cannot be at the expense of Canadian jobs.

"The need to deal with this is immediate," said Dan Mathieson, the mayor of Stratford, Ont., and chair of the Southwest Economic Alliance, which encompasses an area in Ontario from Kitchener-Waterloo to Sarnia and down to Windsor.

"It is a crisis that will only loom larger as time goes on," he said.

With files from the Canadian Press