TORONTO (CP) -- Hyundai Canada said Wednesday it will offer up to $1,000 as an incentive for consumers to scrap old cars for new, fuel-efficient Hyundai vehicles.
The scrappage incentive is the first of its kind to be offered by an individual company in Canada, and the Korean automaker said it will "top up" incentives offered under the federal government's existing Retire Your Ride program.
The company said consumers will receive between $500 and $1,000 in savings, depending on the vehicle, if they trade in an old car for a new Hyundai.
Hyundai president and CEO Steve Kelleher touted the environmental benefits of the program, but it is also aimed at generating sales in an industry that has been hit particularly hard by the recession and slumping consumer confidence.
"With Hyundai topping up all government incentives, we hope to encourage a significant removal of old, polluting vehicles from our roads," Kelleher said in a statement.
In the U.S., a "cash for clunkers" program offers consumers US$4,500 to trade in old cars for new fuel-efficient models. It's been so popular that the $1 billion initially slated for the program was used up within two weeks and the government quickly earmarked another $2 billion to keep it running.
Similar programs in the U.K., France and Germany have also been credited with bringing consumers back to the showroom floor.
New vehicle sales in Germany increased by 20 per cent in April and a whopping 40 per cent in May, largely on the strength of the scrappage program.
In Canada, car makers and dealers have criticized the existing scrappage program as being too small to stimulate sales in any meaningful way, and have urged the government to develop a more robust incentive.
Under the current program, consumers can receive free transit passes, membership in a car-sharing program, money towards a new bike, $300 in cash or a $500 rebate on the purchase of a vehicle built in 2004 or later.
However, the incentives vary by province. New Brunswick and Prince Edward Island are the only provinces in which you can get the rebate. If you live in Ontario, Manitoba or Saskatchewan, your only option is the $300 in cash.
Critics of scrappage programs say they simply boost vehicle sales in the short term by prompting consumers who were already planning to buy a new vehicle to head to the showroom a few months early.
In the United States, the top 10 selling vehicles under the clunkers program do not contain any models by General Motors or Chrysler, the two companies that were saved from collapse by billions of dollars in aid from the U.S., Canadian and Ontario governments.