Mexico knocked Canada out of second spot in the North American vehicle production rankings last year for the first time as output there rose while automakers throttled back Canadian assembly.
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Vehicle manufacturers cranked out 2.191m vehicles in Mexico last year, an increase of 5%, while slashing production in Canada by 19% to 2.077m cars and trucks.
“Almost all of the downturn in vehicle production in Canada is due to the cyclical downturn in North American vehicle sales,” said Toronto-based analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants, but he and others argued that it would be difficult for Canada to bounce back and overtake Mexico.
The shift to smaller vehicles that would occur over the next decade because of stringent new US fuel economy standards would benefit Mexico, analysts said, while the rising tide of protectionism in the United States bodes ill for Canada.
“With a very bad market for the next four to six quarters, the amount of money required to keep the Detroit Three whole is going to be staggering and Canada will be an observer first, a participant second,” DesRosiers noted.
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By GlobalDataThe tens of billions of dollars required to keep Chrysler and General Motors afloat are going to come with strings attached, he said, mainly that future investment be concentrated in the United States.
The biggest decline in Canadian production last year was at GM, which cut output to 463,869 vehicles, down 41% from a year earlier and less than half its peak output of 963,409, which was reached in 2000.
Chrysler cut assembly by 10%, while Ford trimmed production 12%.
GM will cut by even more in Canada this year because it’s closing its full-sized pickup truck plant in Oshawa, Ontario, this spring.
Honda and Toyota also reduced production, even though Toyota opened a new assembly plant in Ontario in December.
That plant opened with just a single shift and anticipated annual production of 75,000, compared with the original expectation of two shifts and 150,000 RAV4 crossover utility vehicles annually.
The threat of a Chrysler bankruptcy or break-up is particularly acute for Canada because the automaker has two plants in Canada that assembled 26% of all Chrysler North American vehicles last year.
They are a large-car assembly plant near Toronto and minivan factory in Windsor, Ontario, that is one of the few plants in North America still running on three shifts.
