End of federal incentives: manufacturers’ turn to lower their prices

A first automobile manufacturer decided to grant a rebate to a Quebec consumer to compensate for the missing federal incentive of $5,000, to his great surprise.

“I was sitting in my car which was in the demonstration room when I was told the news,” says Marc-André Sirois, who was to take possession of a Hyundai Ioniq 5 at a dealership in Saint-Basile-le- Big.

He had just learned that he was no longer eligible for the $5,000 federal grant.

“My tires were in the car and I was ready to leave with my girlfriend and my baby. I only needed the keys. I was in good shape!”

Mr. Sirois signed his papers last Thursday, 24 hours before the announcement of the end of the federal government’s incentives as of March 31.

While the coffers of the federal program for zero-emission vehicles (iZEV) were emptied at an incredible speed, refusals of subsidies began to pile up starting Monday morning in Quebec dealerships. Including that of Mr. Sirois who had to modify his contract.

“According to what I had read, there was money left for 16,000 grant applications as of Friday,” adds Mr. Sirois. When I arrived at the garage on Monday, there was nothing left in the trunks.

Turnaround

Mr. Sirois had good news on Tuesday when Hyundai Canada decided to grant a $5,000 rebate to compensate for the amount of the federal subsidy that appeared on its customers’ contracts. We were not able to find out the specific conditions attached to this discount.

“I received a call to tell me that they were putting back the $5,000 in my agreement, and I will be able to pay for my vehicle at the same price as when I signed my contract,” says Mr. Sirois.

In his agreement, he was already entitled to another rebate of $3,000 which compensated for the reduction in provincial incentives which has been in effect since 1^is January.

Hyundai is not the only manufacturer to compensate for the loss of federal incentives for the purchase of an electric vehicle. Volkswagen also followed suit a few hours later on Tuesday. For the moment, Ford, General Motors, Kia and Nissan have not yet decided whether they will imitate their competitors.

In Quebec, we do not know the number of discounts that will be granted to customers.

If they decide to keep their original plan, they could be stuck with several vehicles in stock at their dealerships.

As of 1^is February, consumers will no longer be able to benefit from any provincial or federal subsidies until at least March 31. It will be interesting to watch the reactions of manufacturers and dealers, whether they will be forced to lower their prices in order to liquidate their inventories.

Unrealistic plan?

There have been multiple reactions in the automotive industry since the surprise end of the incentives.

“We now find ourselves with a completely unrealistic plan at the federal level,” said Tim Reuss, CEO of the Canadian Automobile Dealers Association. “There is blatant hypocrisy in imposing ambitious ZEV mandates and consumer penalties, when the government shows a clear lack of motivation and support to achieve its own policy goals.”