Canadian budget to support car financing: report

Thu Jan 8, 2009 10:08am EST
 
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TORONTO (Reuters) - The Canadian government plans to unveil measures to boost consumer financing for car loans and leases in its upcoming budget, the Globe and Mail reported on Thursday, citing unnamed sources.

Citing people familiar with the matter, the newspaper said Finance Minister Jim Flaherty has indicated he will address the auto sector's credit woes as part of the budget's broader push to ease credit.

The report said Ottawa has not yet decided what form the support will take. One option would be similar to the government's effort to promote bank lending by purchasing insured mortgage-backed securities from banks.

In this case, Ottawa would repurchase car loans, leases and asset-backed dealer loans from banks and auto-related financing companies, the report said. Such purchases would provide additional liquidity for the financial institutions to boost lending and leasing to consumers, as well as dealer financing.

Industry figures out this month showed Canadian auto sales tumbled 21 percent in December from a year earlier, as the worsening global economy undercut consumer confidence and credit was harder to come by.

The Canadian units of General Motors Corp, Chrysler LLC, Ford Motor Co, Toyota Motor Corp and Honda Motor Co Ltd all had sales declines.

(Reporting by Jeffrey Hodgson; editing by Peter Galloway)