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Canada's automakers to lose money for second consecutive year
Ottawa, November 1, 2007 -- Canada's auto manufacturers are expected to lose money again in 2007, before slowly returning to profitability beginning in 2008, according to a Conference Board report.
"Loss of market share by the Big Three automakers (Editor's note -- now more commonly referred to in the media as the 'Detroit Three') and the rise of the loonie have taken a toll on Canada's auto industry," said Louis Thériault, director, Canadian Industrial Outlook Service. "However, the opening of Toyota's new Woodstock (Ont.) plant in early 2008 will help to increase domestic production and boost revenues for the sector. Improved production, combined with major efforts by the Big Three to restructure, will lead to a small industry profit of more than $850 million in 2008."
Industry losses are expected to decline to $550 million in 2007, about half of the loss recorded in 2006. While the high Canadian dollar is hurting export prices -- thereby cutting revenues -- costs are declining even further because of job cuts, lower production and cheaper imported parts as a result of the strong loonie, said Thériault.
Although profits are forecast to continue growing through 2011, profit margins in the motor vehicle manufacturing industry will remain extremely slim because material and labour costs are expected to increase.
This is the first release of the Conference Board's new Canadian Industrial Outlook: Canada's Motor Vehicle Manufacturing Industry, published twice a year. This industry was previously covered in the Board's broader Canada's Auto and Auto Parts Industry report. For details, visit www.conferenceboard.ca.