Canada will boost its Automotive Innovation Fund by C$500 million (US$453 million) over two years as part of its attempt to entice investment from Chrysler and other carmaker as its local auto industry staggers from global competition and dropping output. The amount is on top of the C$316 million ($284 million) invested in six projects since 2008.
The fund provides repayable contributions to carmakers for large-scale research and development projects and has already gained private-sector investments of up to C$2.3 billion ($2.1 billion), according to budget documents released by Finance Minister Jim Flaherty. The increased funding comes as Chrysler is reported to be mulling investing at least C$2.3 billion ($2.1 billion) for its Windsor minivan site in Ontario. The carmaker is reported to have asked the federal and Ontario governments for subsidies.
"The government and Ontario are actively engaged in discussions with Chrysler," remarked Jayson Myers, chief executive officer of Canadian Manufacturers and Exporters. "This is a signal the federal government has money to bring to the table." Chrysler is seeking for contributions of at least 20 percent, or C$460 million ($414 million), from the federal and Ontario governments to upgrade the minivan site and for new research and development, the National Post said in its report last week.
The new funding "will support private sector investment in the long-term competitiveness of the Canadian automotive sector and create and sustain jobs and economic growth," the government said in its budget. The federal and Ontario governments are the second-largest shareholders in General Motors, with a stake valued at around C$3.84 billion ($3.5 billion).