Strained Trade Relations—Due to the extensive cross-border production network between Canadian and U.S. automotive industries, the U.S. administration’s recent (and pending) protectionist tariffs on imports could take a substantial bite out of production and export volumes in both of Canada’s parts and vehicle manufacturing sectors.
Softening Vehicle Production—A symbiotic relationship exists between Canada’s vehicle and parts manufacturing sectors in which vehicle assemblers depend largely on local parts production to be efficient. As U.S. vehicle sales begin to fall from a record peak, domestic vehicle production is expected to soften, which in turn will be reflected in weaker parts production.
New Business Strategies—Canadian vehicle parts manufacturers have found themselves navigating structural changes like the increasing shift of production to low-wage jurisdictions. To counter these trends, recent business strategies of Canadian vehicle parts manufacturers have begun to emphasize innovation rather than production and to pursue acquisitions and non-traditional partnerships to expand R&D capabilities.