Auto makers and parts manufacturers expected to post strong profit growth thanks to rising demand
OTTAWA, June 16, 2014 /CNW/ - Booming vehicle sales on both sides of the border are boosting industry profits for Canadian auto makers and motor vehicle parts manufacturers. Pre-tax profits for Canadian auto manufacturers are expected to reach $1.3 billion this year, their highest levels since 2002, according to The Conference Board of Canada's Spring 2014 Industrial Outlook publications.
"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."
Retooling at several Canadian plants and increased competition from U.S. and Mexican facilities drove down auto production in Canada by 3.6 per cent in 2013. This year, Canadian production will increase by 3.1 per cent. The 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.
Higher production this year and investments at several plants will result in job gains later this year and next. The industry is expected to add 2,900 jobs in 2015.
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 U.S. 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.
SOURCE Conference Board of Canada