In the loan market, dealers can offer their customers financing not just from the manufacturer s financing affiliate but also from five major banks, as well as dozens of smaller banks, trust companies and credit unions. As a result, Canadian consumers today enjoy more choice and pay less for auto loans than Americans do. Research shows that in 1997 loan rates for three popular new vehicles were 0.32 percentage points lower on average in Canada than in the U.S. Competition in leasing will not impact the dealers retail market. Introducing competition to auto leasing will have no impact on the dealers role in selling vehicles. Canada s banks believe that consumers should be free to acquire vehicles from, and arrange lease financing through, the dealership of their choice.
Banks have no intention of selling or delivering vehicles to consumers.
The federal government s Competition Bureau concluded in 1997 that there is no competition policy rationale for the current regulations restricting banks from offering auto leasing. The MacKay Task Force concluded that Even if new entrants are highly successful, the bulk of the impact is likely to be felt by the auto manufacturers finance companies rather than the dealers. The Consumers Associations of Canada said in June 1999 that consumers want greater choice in lease financing for automobiles. Banks participation will introduce competition to the auto leasing market. The U.S. experience shows that banks, automobile dealers and the captive finance arms of vehicle manufacturers successfully co-exist to provide consumers with more competition.