Abstract
The close ties between the Canadian and US automotive industries are being
felt as the uncertainty
surrounding the future of General Motors (GM) and
Chrysler LLC impacts upon the former' s
businesses. The Canadian government
has followed the lead of the Obama administration, claiming that
viability
plans submitted by the local subsidiaries of GM and Chrysler do not go far
enough, and that
more concessions are required. However, the federal
government and the government of Ontario have
provided bridging loans of
CAD4bn while the companies rethink their schemes. A sticking point for
both
carmaking giants is securing sufficient concessions from the Canadian
Auto Workers (CAW) union.
While the CAW is willing to sit down with
government and carmaker representatives, the union will not
renegotiate
the contract already agreed with GM.
While end-2008 sales took the market
into negative growth, the story for early 2009 is of market
contraction
from the outset. Total sales were down by 27.7% compared with February 2008,
while sales
for the first two months of the year combined were 26.5% lower
than the period a year previously.
Uncertainty surrounding the US majors
has hurt the Canadian light vehicle market, which is forecast
by BMI to
fall by another 8% this year. While the market has shown more resilience than
the US, the
presence of three major US manufacturers, coupled with tougher
economic conditions, is taking its toll.
Although Canada has proven more
stable than the US, the market ranks much lower in BMI' s Business
Environment Ratings for the automotive industry in the Americas. The country
ranks eighth on 42.6 out
of a possible 100. Despite the lower ranking, the
country scores highly for its regulatory environment,
reflecting trade
agreements such as the North American Free Trade Agreement (NAFTA). Canada
has
also won investment projects over the US because it is seen as
yielding better results. The market scores
lower in the country structure
category, however.
Although the overall market is down, there are still
some individual achievements of note. Chrysler
Canada topped the country' s
vehicle sales table in February for the first time in its 84-year existence.
The
achievement saw General Motors of Canada (GM Canada) ousted from the
top spot that it had held
since 1950. Adding salt to GM' s wounds, Ford
Motor Company of Canada outsold the former market
leader for second place
- a feat it has not achieved on an annual basis for 60 years. GM Canada
retains the
top spot for the year to February, despite seeing its sales
plummet 51.7% compared with the first two
months of 2008, down to 25,473
from 52,713 units last year. This has given Chrysler a chance to narrow
the gap on an annual basis, although its sales were also down by 30.4% to
23,093 units. Ford stays close
behind in third as it posted the smallest
decline of 14.9% to 22,755 units.
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