The president of General Motors of Canada Ltd. is worried that ultra-cheap auto loans could be causing Canadian vehicle sales to spike just as home sales did during the U.S. housing bubble.

Canadians are on pace to drive more than 1.73 million new vehicles off dealers' lots this year, breaking the record of 1.703 million, but that's a higher level than economic indicators suggest sales should be, Kevin Williams told The Globe and Mail's editorial board Monday.

"Macroeconomically, there's some reason for optimism [but] nobody in the industry had the industry pegged at this number," Mr. Williams said. "Nobody had the industry running this high."

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Part of the reason, he noted, includes eight-year, interest-free loans being offered by some auto companies. His comments highlight again the hot-button issue of consumer debt, singled out by Finance Minister Jim Flaherty and the Bank of Canada as a critical concern before the inevitable rise in interest rates.

Mr. Flaherty has focused on mortgage debt, but auto loan debt has been rising in the fierce fight among auto makers for market share and their battles with each other and Canada's Big Six banks in the auto lending market.

Auto loan debt rose 8.6 per cent in the second quarter from year-earlier levels, outpacing the increase of 6.1 per cent in total debt, according to numbers compiled by Equifax Canada.

Consulting firm J.D. Power and Associates said last month that 64 per cent of Canadians who finance vehicle purchases are taking on terms of six years or longer.

The longer terms are designed to make monthly payments as low as possible, Mr. Williams said, but they mean in some cases buyers will return to dealers for a new vehicle still owing money on the vehicle they're trading in.

"Is it sustainable when a consumer base is leveraged as much as the Canadian consumer base is today?" he asked.

GM Canada has been in the thick of the interest-free battle, offering free money for seven years, but he said it is switching its strategy to focus on leasing.

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It's now offering zero down, zero security deposit, no first month payment and zero money due at signing on its redesigned Chevrolet Silverado pickup truck and some other vehicles.

The restoration of leasing should help GM Canada recover market share, Mr. Williams said, because the auto maker had no customers returning their leased vehicles last year and so far this year. When customers return leased vehicles, typically their existing dealer gets first shot at selling them a new vehicle.

"When we say we're having to gain market share, we have to gain new customers," he added. "These aren't customers coming in with their keys saying: 'We want another one.'"

GM Canada's share fell to 13.3 per cent in the first nine months of 2013 from 13.5 per cent a year earlier and dropped to 12.2 per cent last month when overall sales in Canada hit a September record.

The auto maker is counting on a flood of new and redesigned vehicles to boost market share. That includes the pickup trucks, the Buick Encore crossover and a continued strong performance from Cadillac, whose sales have risen by about 77 per cent this year.

While Mr. Williams would not reveal his target for market share and said the company is profitable in Canada at current market share levels, he said he is not happy with the 13.3 per cent figure.

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"The real question is, are you going to run the business the way you ran it in the past in order to drive market share exclusively. The answer is that's not our intent because it [led to] a failed company."