Production shift to popular light-truck models—U.S. passenger car sales have declined since 2015 in favour of light trucks. The product shift has helped to compensate for the decline in Canadian vehicle production. In addition, Canada’s auto sector has incorporated higher-volume and higher-end vehicles into their model lineup, thus increasing both the value and volume of domestic parts purchases.
Growing demand for non-traditional materials and parts—Stricter vehicle emission standards are encouraging original equipment manufacturers (OEMs) to develop more fuel-efficient vehicles, which is accelerating the lightweighting and electrification of traditional vehicle parts. This will push auto suppliers to innovate with non-traditional materials and designs, as well as advanced manufacturing processes.
Government incentives and programs—Financial incentives by all three levels of government have attracted investment in the parts sector. In addition, programs by the federal and Ontario governments to strengthen the automotive sector’s competitiveness come at the right time as some OEMs and parts suppliers reconfigure their production networks in light of the new North American free trade pact.