Canada - Country Commercial Guide
Automotive

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-08-20

Overview

Canada is the second largest automotive market in North America after the United States. Imports represent approximately three quarters of the new vehicles market. Most global vehicle manufacturers are present in Canada including five of them with local assembling lines: Ford, General Motors, FCA, Toyota, and Honda. In addition to auto sales, the automotive aftermarket annual retail value was estimated by the industry at over US$19 billion and was relatively stable in 2020.

Local manufacturing is historically higher than total imports with approximately three quarters exported. The total annual value of Canadian automotive sector imports was relatively stable in 2018 and 2019 but severely impacted by the COVID-19 pandemic in 2020. The import of passenger vehicles decreased by 23.3% to US$21.9 billion, while imports of trucks and other vehicles for the transport of goods went down by 25% to US$11.8 billion. The imports of tractors decreased 40% to US$2.4 billion. In 2020, Canadian import of automotive parts and components totaled US$13.3 billion. The United States share in the total Canadian automotive import market remains dominant at approximately 63.7%.

The new light vehicles market (passenger cars and light trucks) decreased 19.7% to 1.54 million units in 2020 for the total number of units sold in Canada recorded, of which approximately 40% were U.S. brands. Passenger cars sales remain at about 30% of units sold while 70% are light trucks. Electric vehicle sales, which reached 85,500 units in total sales in 2019, of which 40% were battery electric (BEV) and the rest plug-in hybrid (PHEV), were also impacted by the pandemic in 2020 but remained at 3.52% of total new vehicles registrations, according to industry reports. The penetration started earlier and was the fastest in Québec which has 46% of electrical vehicles registered in Canada, according to CD Howe Institute. The Consumer Price Index (CPI) for 2020 for the entire transportation sector actually decreased by 0.2% while the overall inflation for 2020 in Canada registered a CPI of 0.7%.

The regulatory environment in Canada for the automotive sector is similar to that of the United States, and over 90% of the two countries’ road-safety regulations are harmonized.

Starting September – October 2020 the monthly performance rebounded closer to the same level as before the COVID-19 pandemic. 12 month rolling trend indicates an annual performance for 2021 could be relatively close to 2019.

 Table: Canada Automotive Market Data (US$ Millions)

 

2018

2019

2020

2021 (Estimate)

Total Local Production

 74,333

 73,762

 56,015

 71,096

Total Exports

 58,488

 58,650

 44,499

 56,331

Total Imports

 72,390

 71,695

 53,300

 69,289

Imports from the US

 46,740

 46,842

 33,970

 44,161

Total Market Size

 88,235

 86,808

 64,816

 84,054

Exchange Rates

1.2957

1.3269

1.3415

1.3415

[Total Market Size = (total local production + imports) – exports]

Units: $ millions

Source: Statistics Canada reports

Impact of COVID-19

Statistical data and market reports show a severe impact on demand and sales. Each economic component, manufacturing, export, import, recorded similar decrease recording a total market size decrease of 25%. The demand combined with temporarily closure of dealerships for health safety reasons lead to a sharp drop of sales of new vehicle units of 48% in March 2020. April registered a decrease of 95% compared with 2019. Sales started to rise slowly but reached relatively close level to previous year only after September 2020.

The significant impact affected more sectors of the economy, especially manufacturing. In Ontario, where more than 90% of the Canadian automotive sector is located, the automotive manufacturing sector was declared essential and was not closed by the government during anti-pandemic measures. However, due to a combination of safety measures for the work force and drop in market demand, vehicle manufactures stopped assembly lines beginning March 2020. Operations resumed in the summer of 2020 with Tier 1 and 2 manufacturers reducing their manufacturing to strict necessities. Notably, many of these manufacturers have switched some capacities to the production of medical supply.

The aftermarket segment will continue however to remain strong due to the large size of vehicles registered on the road. Components and parts will remain strong and provide many opportunities for U.S manufacturers.

Leading Sub-Sectors (total imports in 2020)

· Motor Vehicles for Passenger Transport (Other than Buses/Public Transport) (US$21.9 billion)

· Trucks and Other Vehicles for The Transport of Goods (US$11.8 billion)

· Motor Vehicle Assembly Components and Parts (US$13.3 billion)

· Motor Vehicles for Special Non-Transport Purposes (US$662 million)

Opportunities

The Canadian Government is targeting carbon neutrality by 2050 and allocated large investment resources in the 2021 budget for infrastructure and a green economy. The Canadian subsidiaries of the U.S. auto makers announced investments to prepare their production lines for electric vehicles: General Motor US$785 million, Ford US$1.5 billion, and Chrysler US$ 1.14 billion. A large number of market players are also preparing for this trend and represent significant opportunities.

Canadian Tier 1 and 2 automotive manufacturers have very large supply chains to cover a large variety of high-tech needs for their processes. They are building automotive assemblies and systems in locations in Canada and worldwide. The largest of them, Magna International, is one of the world’s top manufacturers and is also assembling complete vehicles for companies like Mercedes, BMW, and Chrysler (not in Canada). There is also a very strong industry organization, the Automotive Parts Manufacturers Association (APMA).

Advanced technology clusters are also significant opportunities. One such example is the autonomous vehicle cluster Kanata North Business Association. Several municipalities are already developing related programs.

Example of significant opportunities in components and parts sub-segments showing 2020 Canadian imports:

· Gear Boxes (Transmissions) and Parts - US$1.9 billion

· Drive-Axles with Differential and Parts - US$761 million

· Suspension Systems and Parts Thereof, Including Shock-Absorbers – US$995 million

· Silencers (Mufflers) and Exhaust Pipes and Parts - US$317 million

· Clutches and Parts - US$248 million

· Motor Vehicle Parts, not elsewhere specified - US$2.7 billion

Resources

Major Events and Trade Shows in Canada

· Automotive Parts Manufacturers Association Annual Conference and Exhibition, Windsor, Ontario, 2022

· Truck World, Toronto, Ontario, April 21-23, 2022

· Montréal International Auto Show, Montréal, Québec, January 2022

· Canadian International Auto Show, Toronto, Ontario, February 18-27, 2022

· SelectUSA Manufacturing Forum, U.S. Commercial Service Event, Canadian International Auto Show, Toronto, Ontario - February 17, 2022 (to be confirmed)

· Montreal Electric Vehicle Show, Montréal, Québec, September 17-19, 2021

Industry Associations

· Automotive Industries Association of Canada

· Automotive Parts Manufacturers’ Association

· Kanata North Business Association

Additional Resources

· Transport Canada

· Statistics Canada

· DeRosiers Automotive Consultants

· FleetCarma

Commercial Service

For additional information on this sector, please contact Commercial Specialist Stefan Popescu at Stefan.Popescu@trade.gov or by phone at (416) 595-5412, Ext. 223.