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

Canada’s auto and auto parts sector is a good news–bad news story. Weak sales in Canada and the United States are leading to production cuts at all of the Big Three automakers in Canada. The strong Canadian dollar will also continue to weaken exports over the near term.

But the Big Three are still investing billions to enable processes such as flexible manufacturing. And Toyota is building a whole new assembly plant in Woodstock, Ontario, as well as a new parts plant.

Overall, therefore, sector profits will recover this year from the plunge they took last year, and then continue climbing to reach $3.6 billion in 2007. From 2008 to 2010, profit margins will stabilize at about 3 per cent, with margins for parts producers slightly higher than those for assemblers. Profits will range between $3.6 billion and $5.2 billion, significantly lower than at the end of the 1990s.