Auto industry shifts into high gear this year

Conference Board of Canada report forecasts strong profits.

Canada saw production volumes shrink in 2013.

Canada saw production volumes shrink in 2013.

OTTAWA — Booming vehicle sales on both sides of the border are boosting industry profits for Canadian automakers and parts manufacturers, according to a Conference Board of Canada report.

The Ottawa-based research firm’s Spring 2014 Industrial Outlook says pre-tax profits for auto manufacturers are expected to reach $1.3 billion this year, their highest levels since 2002.

“It was a chilly start to the year for car sales but the spring thaw has brought customers back to the car lots at record-breaking levels,” said Jacqueline Palladini, senior economist. “American consumers, in particular, are replacing their older vehicles due to a steady increase in income, jobs, and credit availability.”

The report notes automotive manufacturing will add approximately 2,900 jobs next year; and Mexico will surpass Canada in vehicle exports to the US for the first time in 2015.

Retooling at several Canadian plants and increased competition from US and Mexican facilities drove down auto production in Canada by 3.6% in 2013. This year, Canadian production will increase by 3.1%.

The Conference Board says revamped auto plants will be better positioned to take on growing demand and the drop in the value of the Canadian dollar will ease competitive pressures somewhat.

It forecasts higher production this year and investments at several plants will result in job gains later this year and next.

Similarly, Canada’s motor vehicle parts manufacturing industry is expected to have a strong year in 2014. Robust demand for parts from manufacturers in Canada and the bordering US states will boost industry production by 5.2 per cent this year.

Parts producers are expected to generate healthy pre-tax profits of $1.5 billion in 2014.

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