JAMA Canada Annual Review 1999
Review of the Japanese Auto Industry in Canada - 1998
The Japan Automobile Manufacturers Association of Canada is a non-profit trade association established in 1984 to promote greater understanding on economic and trade matters pertaining to the motor vehicle industry and to encourage closer cooperation between Canada and Japan. JAMA Canada's members include the following companies who import, distribute, manufacture and export automotive products:
Hino Diesel Trucks (Canada) Ltd., Honda Canada Inc., Honda of Canada Manufacturing, Mazda Canada Inc., Nissan Canada Inc., Subaru Canada Inc., Suzuki Canada Inc., Toyota Canada Inc., and Toyota Motor Manufacturing Canada Inc.
JAMA Canada Members' Operations in Canada
As a group, JAMA Canada members have become an integral part of the Canadian auto industry that makes a significant and growing contribution to Canada:
- Through an extensive distribution, sales and service network employing over 30,000 Canadians from Newfoundland to British Columbia;
- Through several billions of dollars in direct investment, joint ventures and industrial cooperation in vehicle and parts manufacturing;
- Through the direct employment of about 17,500 Canadians at Japanese vehicle and auto parts manufacturing operations, and several hundred new jobs which will be added over the next few years.
- Through the export of about 76% of vehicle production to the U.S. and other foreign countries, which adds to Canada's trade balance.
- Through Japanese automakers' presence in the Canadian market for over thirty years which has helped to stimulate competition for the benefit of Canadian consumers.
- Through manufacturing investment, forging a hybrid of Canadian and Japanese business and industrial culture; and through a growing array of supplier relationships helping Canadian industry be globally competitive through the diffusion of both product and process technologies.
The Japanese auto industry in Canada is comprised of more than just the current members of JAMA Canada. For this review, we collect and publish information about Japanese affiliated parts investments and operations in Canada. For a list of JAMA Canada members, please see the Members page. For a list of Japanese affiliated auto parts companies in Canada, please see the Auto Parts page.
Contributions to the Canadian Economy
1. Consumer Benefits
In pursuit of satisfying the ever demanding consumer, Japanese automakers have stimulated competition and raised the quality of vehicles not only made in Japan, but increasingly vehicles designed and developed in North America for the Canadian and U.S. markets. For all automakers, quality is a necessary ingredient just to be able to participate in an increasingly competitive global industry. But for Japanese automakers, quality is a constantly moving target, driven by the demands of the consumer, lower costs and continuous improvement. What's more, about 54%, or almost three of every five Japanese brand vehicles currently sold in Canada are built in North America. As such, the benefits to local communities and local suppliers in Canada continues to grow, particularly as capacity in Canada expands from 530,000 units in 1998 to over 700,000 units by 2001. In addition, according to opinion polls and industry surveys over the years, Japanese vehicles still represent the leading edge in terms of reliability, performance and customer satisfaction.
The Japanese auto industry is multi-faceted and in the aggregate, employs over 49,000 Canadians in manufacturing both parts and vehicles, imports, exports, transportation, distribution, sales and service.
In the manufacturing sector, more than 7,700 Canadians work in three motor vehicle manufacturing plants, and about 9,800 jobs have been created in Canada through various parts and materials operations supplying the North American auto industry. Expanding manufacturing investments at Honda of Canada Manufacturing and Toyota Motor Manufacturing Canada will add hundreds of additional jobs directly, plus significant indirect employment as a result of increasing local sourcing of supplies and services. There are about 30,000 Canadians employed in about 1,000 dealerships according to the Canadian Association of Japanese Automobile Dealers (CAJAD). Finally, there are about 1,600 people employed in the national distribution and head offices of JAMA Canada members.
Several of our member companies maintain regional offices and warehouses in different regions of Canada including Western Canada, Ontario, Quebec and the Maritime region. Some member companies run operations in Canada related to vehicle engineering, design and testing. These R&D activities focus primarily on vehicle and component cold weather testing in Northern Ontario and in the Maritimes.
3. Investments in Manufacturing
There are three vehicle manufacturing plants and currently thirty-seven Japanese affiliated auto parts and related materials and machine tool operations in Canada. Total investment in vehicle manufacturing stands at $4.3 billion. Further details about parts and vehicle manufacturing in Canada can be found on pages x through y.
Honda Canada announced in 1995 a $300 million minivan plant in Alliston, Ontario that opened in 1998 with a two-shift capacity of 120,000 units and an additional 1,200 associates. The new plant started production of the new, larger Odyssey minivan in the summer of 1998. The plant will be operating on one shift initially, adding a second shift in mid-1999 to reach projected capacity. Honda Canada also announced an additional 60,000 units of capacity may be added by 2001, depending on market conditions in North America.
In 1997, Toyota opened their $600 million plant in Cambridge, Ontario which increased capacity by 120,000 units and an additional 1,200 team members. TMMC continues to make Corollas and 1.8L four cylinder engines for the Corolla and officially began assembly of the Camry Solara in September, 1998. TMMC will also produce about 6,000 convertible models of the Camry Solara annually starting in 2000. Canada is the exclusive worldwide location for the production of both the Honda Odyssey and the Toyota Camry Solara.
CAMI Automotive, the 50/50 joint venture manufacturing plant established by Suzuki and General Motors of Canada in Ingersoll, started production of the new compact sport utility vehicle (SUV) in October 1998 - the Suzuki Vitara and the Chevrolet Tracker. Since start-up in 1989, CAMI continues to build two different vehicles, a sub-compact passenger car, the Suzuki Swift and the Chevrolet Metro, along with the compact SUV. Total capacity is 200,000 units annually.
When these expansions are complete, over $4.3 billion will have been in invested in Canadian vehicle manufacturing, with a potential production capacity of 730,000 units, and a workforce of 8,300 Canadians at Honda, Toyota and CAMI.
In 1998, Japanese automakers manufactured about 3.0 million vehicles in North America. Canadian plants built over 396,000 units or 14.3% of total Japanese production in North America which grew by 3.1% in 1998 to almost 2.8 million units. With a significant increase in production capacity from current expansions at Honda and Toyota together with higher output from new SUV production at CAMI, the Canadian share of total Japanese vehicle production in North America should expand in 1999.
As in 1997, about 76% of total vehicle output at the three Japanese affiliated operations in Canada was exported in 1998, primarily to the US. About 9,000 units were shipped to other countries including Puerto Rico and Latin America.
Comparing exports and imports of vehicles in 1998, for the sixth consecutive year Canada has been a net exporter of Japanese vehicles. Imports from Japan, the US and Mexico totalled 247,000 units, while 302,000 vehicles were exported, thereby contributing to Canada's trade balance.
Comparing production and sales in Canada, there were about 1.3 vehicles produced in Canada for each one sold by all JAMA Canada members combined. At the same time, all vehicles that were exported to the US met the NAFTA rule of origin requirements for North American content.
1998 - The Year in Review
Japanese-affiliated vehicle production in Canada grew by 3.4% in 1998 to over 396,000 units. Behind this modest increase, however significant changes are evident. Output at Honda (HCM) in Alliston rose 8.8% over 1997 to just under 180,000 units and Toyota (TMMC) in Cambridge increased production 58.6% to almost 172,000 units. Both HCM and TMMC opened new or renewed plants in 1998 for the Odyssey minivan and the Camry Solara coupe, respectively.
Honda: Output at HCM increased 8.5% to over 179,000 units in 1998, largely due to start-up of the second plant for the Odyssey. Production of Civic and Acura EL models gained 1.3% to over 167,000 units, while almost 12,000 minivans were built by the end of the year. While production of the Odyssey is still on one shift, the second shift is expected to start in the spring, with full capacity likely to be reached later in the fall. Total output for the model year is estimated at 75,000 units, with 60,000 units exported (most to the US, some to Japan including right hand drive) and 15,000 for the Canadian market.
Toyota: At TMMC, both Corolla and Camry Solara production boosted output 57.6% over 1997 to just under 172,000 units, up from 109,000 last year. Corolla production shifted to the second plant in 1997, and production of the Camry Solara began in the fall of 1998 at the original plant. TMMC has recently announced the addition of a Camry Solara convertible for manufacture in Cambridge. The new model is slated to go on sale in the spring of 2000 and Toyota is expecting to sell 6,000 Solara convertibles per year. TMMC has teamed up with American Sunroof Corporation (ASC) Inc. of Michigan for production of the convertible. ASC will establish a facility to integrate the production of the Solara convertible in Cambridge, and is expected to create over 50 new jobs.
CAMI: At the same time, CAMI was idle during the summer due to soft demand in the US, but started production of the new Suzuki Vitara / Chevrolet Tracker compact sport utility vehicle in Ingersoll last September. While this should boost their output in 1999, over the past calendar year, total production at CAMI dropped 59% to about 45,000 units for both the SUV and the subcompact Suzuki Swift / Chevrolet Metro.
* estimated Source: JAMA Canada
As the Canadian market alone is too small to sustain rising levels of production in Canada since the Auto Pact was signed in 1965, integration of the industry on a North American basis has allowed foreign automakers in Canada to benefit from trade agreements that permit access to the larger U.S. market. Like the U.S. Big 3, Japanese automakers export a high level of their Canadian production, and likewise, rely on imported models to serve the needs of the Canadian consumer.
In 1998, three Japanese-affiliated plants in Canada exported about 302,000 units, up 3.4% from 292,000 units in the previous year. About 97% of exports are shipped to the U.S., while about 9,000 units are exported to other destinations, such as Puerto Rico and Latin America.
Honda's exports of finished vehicles from Canada in 1998 reached a new high level at over 134,000 units, a gain of 10.9%. TMMC's exports jumped 76.0% to about 130,000 units, also a record level. CAMI shipped 60.8% fewer units in 1998 than in the previous year, down to 38,000 units from 97,000 in 1997.
The ratio of units produced to units exported were unchanged from a year earlier. About 76.3% of all vehicles produced in 1998 were exported, compared to 76.2% in 1997. As mentioned previously, Canada has been a net exporter of Japanese brand vehicles every year since 1993, as exports exceeded imports. While 302,471 vehicles were exported from Canada, 246,571 units were imported in total from Japan, the U.S. and Mexico.
* estimated Source: JAMA Canada
Overall imports of finished vehicles by JAMA Canada members grew 4.6% in 1998 to 246,571 units from 235,767 units in the previous year as a result of higher shipments from both the US/Mexico and Japan. The increase was mainly due to strong consumer demand for Japanese brand vehicles.
Japan: Shipments of vehicles from Japan in 1998 were up 3.4% to 145,755 units from 140,960 units in 1997. At the same time, finished vehicle shipments from Japan to Canada changed direction in the course of 1998. While strong in the first quarter, over the last three quarters, shipments were declining. For the fiscal year beginning in April, vehicles exported from Japan have fallen 12.8% overall, from 115,000 to 100,000 units to the end of December.
|Imports from Japan|
US/Mexico: Vehicles shipped from plants in the US and Mexico for JAMA Canada members rose 6.3% in 1998 to under 100,800 units, up from 94,800 units in 1997. Passenger car shipments edged up 1.4%, while light trucks rose 26.1% year over year.
|Imports from US/Mexico (NAFTA)|
* estimated Source: JAMA Canada
Sales of JAMA Canada members in 1998 attained a new peak, topping out at 330,148 units, an increase of 10.9% over 1997. The previous peak was in 1991 when Japanese automakers sold 325,000 vehicles in Canada. The key difference between then and now is the fact that in 1998, 54% of all vehicles sold were models built in North America, compared to only 20% in 1991.
In 1998, although the total market in Canada was flat, Canadian consumers continued to be attracted to Japanese brand cars, light trucks, minivans and sport utility vehicles. A combination of new models, high quality and reliability, as well as competitive prices were likely factors in establishing this record performance. The top-selling passenger car in Canada for 1998 was the Honda Civic at 54,065 units, the first time that a Japanese brand has topped the field in Canada. The Toyota Camry took the top sales honours in the US for 1998 for the second year in a row.
Passenger car sales recorded an increase of 9.0% to 246,336 units. Reflecting the strength of the light truck market in Canada, JAMA Canada members' light truck sales jumped 17.1% in 1998 to 83,123 units from 71,033 units the year before. About 54% of sales were models built in North America. By class of vehicle, about 60% of passenger cars and 35% of light trucks were North American built. Several JAMA Canada members achieved new record high sales in 1998 including Hino, Honda, Subaru and Toyota.
Japanese brand market share gained over two points in 1998 over the previous year, rising to 23.7% from 21.4%. Passenger car share rose to 33.3% from 30.6%, while the light truck share rose almost two points to 12.8% from 10.9% in 1997.
|JAMA Canada Members' Sales in Canada|
Total Light-Duty Vehicles
Source: AIAMC, JAMA Canada
* includes HINO (medium-duty)