Reshaping the auto industry: Technology innovation is the way ahead


Economy Industry Automotive Manufacturing assembly automotive industry Innovation KPMG manufacturing Technology

Global restructuring is underway; bold moves are needed.

No clear consensus on which technology would power vehicles of the future.

With General Motors’ announced closure of its quality award-winning Oshawa Assembly Plant, and almost stagnant investment from automakers, you’d think the automotive industry in Canada was on the way out.

Not so, according to a KPMG in Canada report that says the way ahead is auto-technology innovation.

The State of Canada’s Auto Sector: Recalculating the Route Ahead looks at an industry feeling the effects of shifting markets, increased global competition, new technology and consumer trends. The Canadian advisory company draws on KPMG’s 20th Global Automotive Executive Survey (GAES), an annual survey of 3,000 auto executives and consumers, to describe what’s next, and that involves leaving old business models behind.

“General Motors’ decision to close its Oshawa plant marks an inflection point for the Canadian auto industry,” says Peter Hatges, a KPMG in Canada partner and national sector lead, automotive markets. “We’re seeing the effects of a shift in global sales and increased competition from lower-cost markets, as the industry explores new frontiers in electric and autonomous driving. These factors are reshaping the roles of car makers, both original equipment manufacturers and their suppliers, within an evolving supply chain.”


Not that the Canadian automotive sector is without strengths. Hatges cites a skilled and available labour force, a mature supplier network and ongoing government support through manufacturing, production and R&D tax credits and incentives. And Canada’s auto industry contributes $19 billion to GDP, making it one of the country’s largest manufacturing centres.

Maintain vigilance

“The Canadian government has done its part to nurture our domestic auto industry, and defended the sector when negotiating the US-Mexico-Canada Agreement (USMCA),” Hatges says. “Ottawa needs to continue to maintain a vigilant watch … as USMCA further reshapes supply chains, pricing and investment strategies in North America. Ultimately, it’s up to industry to read the future and grab onto emerging opportunities.”

KPMG found no clear consensus on which auto technologies would power the cars of the future. Most executives believe multiple technologies will co-exist in the future, including internal combustion engines (ICEs), hybrids, battery electric vehicles (BEVs) and fuel cell vehicles(FCEVs). ICEs remain popular and hybrids are a top choice for consumers. BEVs are an important manufacturing trend, although one in three consumers agree price is the biggest barrier to buying a fully electric car.

What’s the way forward? KPMG offers five suggestions to industry players:

Be bold. OEMs, suppliers and auto-tech innovators need to move beyond following trends and set the standard for industry innovation. This means coming to market with more effective ways to design, engineer and manufacture leading-edge automotive materials and technologies.

Be the best supplier. Despite protectionist sentiment in the US, the auto supply chain is highly integrated and global. To stand out, Canadian suppliers must contribute quality improvements, technology advances and cost savings to their customers. Being the supplier of choice means helping these companies manage new risks and contributing to profitability.

Be visionary. The future of mobility in Canada is complex and likely to encourage cross-industry partnerships. Rethink old business models and cooperate to create a mobility ecosystem that addresses the unique perspectives of millennials who are less reliant on cars. Government will shape transportation and electricity infrastructure, influencing the type of cars Canadians will drive in the future. FCEVs, considered a breakthrough for e-mobility, could solve the infrastructure challenges of Canada’s vast geography and current battery limitations in cold weather conditions.

Build Canadian tech alliances. More can be done to tap into Canada’s world-leading tech hubs. Ontario’s auto and tech industries are particularly well positioned to meet these new demands. Cooperation and strategic alliances with the tech sector, rather than competition, will drive success.

Be connected. Brand is no longer so key for consumers as digitization, seamless connectivity and data security gain importance. As vehicles increasingly continue to connect to the roads, systems and apps around them, catering to those needs and providing the most integrated customer experience will be a competitive advantage.


• Connectivity digitalization is back as the top key trend.

• There is not one global answer – the world is a combination of islands.

• The auto industry is about to run into a restructuring phase.

• 75% agree raw materials drive the preferred powertrain technology of a country.

• 77% agree the regulator will drive an OEM agenda that’s also being driven by industry politics.

• Industry policies in Asia and the US seem to be far more advanced than in Europe.

• 66% believe that by 2030 less than 5% of cars will be produced in Western Europe.

• Executives agree that China will leapfrog the market with its battery electric vehicles.

• 60% of executives agree: in the future we will no longer differentiate between transport of humans and goods.

Source: KPMG’s Global Automotive Executive Survey 2019

Download the State of Canada’s Auto Sector: Recalculating the Route Ahead.

This article appeared in the March 2019 print issue of PLANT Magazine.



Stories continue below

Print this page

Related Stories