Overview

Canada is the second largest automotive market in North America. Imports represent approximately three quarters of the new vehicles market. Most global vehicle manufacturers are present in Canada, including five with local assembling lines: Ford, General Motors, Stellantis (including Chrysler), Toyota, and Honda. In addition to new sales, the automotive aftermarket annual retail value was estimated by the industry at over US$16 billion and was relatively stable through 2022.

Although local manufacturing rebounded considerably during 2022 to pre pandemic levels, the value of total imports remains proportionately higher. The total annual value of Canadian automotive sector imports was severely impacted by the COVID-19 pandemic, decreasing 24% in 2020. However, the industry reported growth of 23% in 2021 and roughly a 15% increase in 2022 making the market six percent larger than it was in 2019.

In 2022, the import of passenger vehicles increased approximately 12% to US$31 billion, higher than pre-pandemic levels. Furthermore, the imports of trucks and other vehicles for the transport of goods, as well as of tractors, also increased beyond 2019 values. In 2022, Canadian imports of automotive parts and components totaled US$15.4 billion, close to 2020 levels. The United States’ share in the total Canadian automotive import market remains dominant at approximately 62%.

The new light vehicles market (units of passenger cars and light trucks) increased 6.6% to 1.64 million units in 2021 but decreased to 1.49 million in 2022 of which approximately 40% were U.S. brands. Passenger car sales are now about 16% of units sold, while 84% are light trucks (including most SUVs).

The Canadian regulatory environment for the automotive sector is harmonized to that of the United States, while over 90% of the two countries’ road-safety regulations are identical.

[Total market size = (total local production + imports) – exports]

Units: $ millions

Source: Statistics Canada reports, Bank of Canada annual average 

Market Drivers and Structural Shift

After the severe impact on demand and sales due to the COVID–19 pandemic, each economic component, manufacturing, export, and import rebounded.

A significant market driver is the pursuit of net-zero emissions, which the government is pursuing to reach in new vehicles sales 60% zero emission vehicles by 2030 and 100% by 2035, introducing specific incentives including, point-of-sale rebates. An additional driver is the significant increases in fuel costs due to global events.

Electric vehicle sales, both battery electric (BEV) and plug-in hybrid (PHEV), are now over 85,500 per year. The market penetration was faster in Québec.

The supply chain challenges affecting production resulted in challenges in meeting demand and the structural shift towards EVs led to some price increases.

Leading Sub-Sectors (total imports in 2021)

• Motor Vehicles for Passenger Transport (not Buses/Public Transport) (US$ 27.8 billion)
• Trucks and Other Vehicles for The Transport of Goods (US$14.8 billion)
• Motor Vehicle Assembly Components and Parts (US$13.1 billion)
• Motor Vehicles for Special Non-Transport Purposes (US$727 million)

Opportunities

The Canadian Government is aiming to reach carbon neutrality by 2050 and allocated large investments in the 2021, 2022, and 2023 budgets towards infrastructure and a green economy. Canadian subsidiaries of U.S. automakers announced substantial investments, including General Motor (US$785 million), Ford (US$1.5 billion), and Stellantis (US$ 1.14 billion), to prepare their production lines for electric vehicles.

Additionally, in early 2022, GM Canada, Ford Motors Canada, and Stellantis Canada announced plans for building their own facilities to manufacture batteries for electric vehicles. In May 2023, Nova Bus, a manufacturer of electric buses from Montréal, Québec, announced winning a record order to deliver up to 1,299 transit buses to municipalities from Québec.

Many market players represent significant opportunities in this sub-sector. Canadian Tier 1 and 2 automotive manufacturers have very large supply chains to cover a variety of high-tech needs for their processes. They are building automotive assemblies and systems in locations in Canada and worldwide. Canada also has a strong national industry association, the Automotive Parts Manufacturers Association (APMA), which represents OEM producers of parts, equipment, tools, supplies, advanced technology, and services.

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.

Examples of significant opportunities in components and parts sub-segments showing 2021 Canadian imports:

• Gear Boxes (Transmissions) and Parts - US$ 2.1 billion
• Drive-Axles with Differential and Parts - US$ 1.1 billion
• Suspension Systems and Parts Thereof, including Shock-Absorbers – US$ 1.2 billion
• Silencers (Mufflers) and Exhaust Pipes and Parts - US$ 387 million
• Clutches and Parts - US$ 346 million
• Motor Vehicle Parts, not elsewhere specified - US$ 3.3 billion

Resources

Major Events and Trade Shows in Canada:

• Canadian International Auto Show, Toronto, Ontario, February 16-25, 2024
• Truck World, Mississauga, Ontario, April 18-20, 2024
• Montréal Electric Vehicle Show, Montréal, Québec, April 2024

Industry Associations

• Canadian Vehicle Manufacturers’ Association
• Global Automakers of Canada
• Automotive Industries Association of Canada
• Automotive Parts Manufacturers’ Association
• Kanata North Business Association

Additional Resources

• Transport Canada
• Statistics Canada

Commercial Service Contacts:

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.