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It
is a great pleasure, as the Chairman of JAMA Canada, to be publishing
our 1999 Annual Review of the Japanese auto industry in Canada. JAMA Canada
was established in 1984 to promote greater understanding on economic and
trade issues in the motor vehicle sector. We hope this report will contribute
to this objective.
Overview
of 1998
For JAMA Canada members as
a group, 1998 was a superlative year in terms of new vehicle sales, as
well as production and export of motor vehicles in Canada. On the heels
of record sales growth in 1997, units sales of JAMA Canada members reached
a new peak of 330,000 in 1998 surpassing the previous sales record of
325,000 units set in 1991. The key difference between sales records in
1991 and 1998 is the fact that last year about 54% of all Japanese brand
sales were built in North America, compared to only 20% in 1991.
The factors behind this performance
included a robust level of consumer confidence, low interest rates, stable
prices together with rising demand for certain kinds of new vehicles,
particularly light trucks, vans and sport utility vehicles. For example,
in 1998 Japanese brand passenger cars sales increased 9%, but light truck
sales jumped 17% over the previous year. What’s more, almost all
of the increase in light truck sales were models built in North America.
Production at Japanese affiliated
plants in Canada also attained new heights in 1998 as output rose 3.4%
overall to just under 400,000 units. The gain stems largely from higher
capacity at both Honda of Canada Manufacturing and Toyota Motor Manufacturing
Canada as new and renewed plants were opened in 1998. And due to high
levels of integration in North America, about 76% of total output was
exported, or about 300,000 units. Most exports went to the United States,
while about 6,000 units were shipped to third countries.
Looking at overall performance
as a group, Japanese automakers produce more than one vehicle in Canada
for every one sold in Canada, and we export from Canada more vehicles
than we import from Japan, the US and Mexico combined. When all current
expansions are completed early in the new millennium, total production
capacity will exceed 700,000 units annually.
There have been remarkable
and dramatic changes since the mid-1980’s when Japanese automakers began
to establish manufacturing in Canada, and the ongoing growth in vehicle
and parts production in Canada is a clear and unequivocal vote of confidence
in the future of the Canadian auto industry.
Highlights of
1998
Among the key events of last
year from JAMA Canada’s perspective were the openings of Honda’s
second assembly plant in Alliston, Ontario where the new Odyssey minivan
is being built, and the re-opening of Toyota’s first plant in Cambridge,
Ontario which is now making the Camry Solara. Both vehicles are being
exclusively produced in Canada.
JAMA Canada participated in
the 21st Canada Japan Business Conference that was held in
Karuizawa, Japan in 1998. The association also continued the liasion and
communication activities that were transferred from PAC following the
closing of its office in Canada in 1997. These activities included assisting
in arrangements for two APMA (Automotive Parts Manufacturers Association
of Canada) missions to Honda in Marysville, Ohio and Toyota in Georgetown,
Kentucky, as well as a Keynote Speaker from Honda Motor Co. Ltd., Japan
for the 1999 APMA Annual Conference.
With respect to trade policy
issues in 1998, JAMA Canada submitted a brief to Industry Minister John
Manley outlining our views on automotive tariffs and trade policy for
the Federal Government’s Automotive Competitiveness Review. Our brief
advocates fair and equal treatment for all automakers in Canada through
open, transparent and non-discriminatory trade policies consistent with
the GATT/WTO, as well as reduced tariffs on finished vehicles, a measure
that will benefit Canadian consumers. At the current time, Canada’s
Most Favoured Nation tariff applied to passenger vehicles, while modest
by international comparison, is higher at 6.1% than either the US at 2.5%
or Japan at 0%.
While Minister Manley released
the results of the Automotive Competitiveness Review in a report last
June, JAMA Canada was very disappointed to see that there were no changes
in the current policies or procedures that treat some companies more favourably
than others. As there was no change as a result of Canadian Government’s
policy review, last summer both the Governments of Japan and the European
Union requested dispute settlement panels at the WTO to try to resolve
this matter by reference to international trade rules. The results of
the panel are expected later this year.
On behalf of the members of
JAMA Canada, I hope this annual review will be useful in understanding
the activities and views of the Japanese auto industry in Canada. We welcome
any comments, suggestions or questions.
Yoshio Nakatani
Chairman
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