Canada’s Auto and Auto Parts Industry: Industrial Outlook, Autumn 2006

Canada’s auto and parts sector is set to record declines in demand, prices, production and exports in 2006. Still, revenues will post a 3.3 per cent gain stemming from a boost in revenues in the third quarter of last year, when sales surged thanks to employee-pricing discounts. This gain will allow overall profits to reach $1.3 billion. Next year, continued revenue growth will reflect a small comeback in production, leading to profits of $2.1 billion.

Despite the fact that the Big Three automakers are cutting production, overall they are still investing billions in plants and equipment. As well, Toyota is building an assembly plant, and both Toyota and Honda are building parts plants. This investment will enable modest growth in production and employment between 2008 and 2010, as profits range from $4.1 billion to $5.1 billion—an improvement, but nowhere near the profits of the late 1990s.