Trends Affecting the Canadian Auto Industry - Presented by: Alan Baum Principal June 12, 2019
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Trends Affecting
the Canadian Auto
Industry
Presented by:
Alan Baum
Principal
June 12, 2019
N.A. Production
18.0
17.8
17.8
17.7
17.6
17.5 17.5
17.5
17.3
17.2
17.0 17.1
17.0 17.0
16.9 16.9
17.0
16.7
of Units
16.5
16.4
Millions
16.2
16.0 16.1
15.7
15.3
15.0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Midra nge Pe ssimisti c Op timistic
2Canadian Vehicle Assemblies
Thousands
1,000
800
600
400
200
0
2016 2017 2018 2019 2020 2021 2022 2023 2024
Chrysler Ford GM Transplant
3Canada-Built Engines and Transmissions
Canadian Engine Assemblies
Thousands
300
250
200
150
100
50
0
2016 2017 2018 2019 2020 2021 2022 2023 2024
Canadian Transmission Assemblies
Ford GM Transplant Thousands
800
600
Ford: Large V8s 400
GM: 3.6 V6, A6 and A9, some from Warren, MI
200
Toyota: 1.8 I4 for Corolla
0
2016 2017 2018 2019 2020 2021 2022 2023 2024
GM
4Canadian-Built Vehicles
Vehicle model assembled in Location of assembly Assembled only
Vehicle type
Canada plant in Canada in Canada?
Chrysler 300 Brampton Yes Luxury car
Dodge Challenger Brampton Yes Muscle car
Dodge Charger Brampton Yes Muscle car
Chrysler Pacifica Windsor Yes Minivan
Ford Edge Oakville Yes Crossover
Lincoln Nautilus Oakville Yes Crossover
Chevrolet Equinox Ingersoll No Crossover
Toyota Corolla Cambridge No Small car
Honda Civic Alliston No Small car
Honda CR-V Alliston No Crossover
Toyota RAV 4 Woodstock No Crossover
Lexus RX350 Cambridge5 Yes CrossoverVolume and Fuel Economy of Canada-Built Vehicles
GM, Ford, FCA: 686,000 vehicles produced Toyota, Honda, Lexus: 1,129,000 vehicles
40 in Canada and sold in the U.S. produced in Canada and sold in the U.S. 300,000
35
250,000
Units sold in the U.S. 29
30
Estimated miles 200,000
25 per gallon* 21
20 150,000
15
100,000
10
50,000
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* STICKER fuel economy
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values taken from
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6US-Mexico-Canada Trade (Agreement?)
• The US, Canada, and Mexico have just negotiated the end of steel and
aluminum tariffs, setting the stage for ratification of the USMCA.
• The USMCA (or NAFTA 1.1, per Dustin Walsh of Crain’s Detroit Business)
looks to have modest impacts on the auto industry. Many automakers do not
seem happy with the agreement, but are publicly supporting it based on the
view that any agreement is better than none. However, the USMCA will have
significant compliance costs (true for larger suppliers as well, although “roll-
up” provisions overstate domestic content and reduce complexity). Even
those makers with high US content will be subject to penalties on some
vehicles. The agreement is based on individual vehicles rather than on a
company fleet average, and exports are not credited.
• The 2.5% non-compliance tariff is too small to change behavior.
• “Side letters” eliminate much of the incentive to move truck production and
some part production from Mexico, and may already be in effect.
• The outlook for ratification is not good; the likely result could be the current
NAFTA remains in force unless underlying legislation passed in the 1990s is
undone.
7Views of Automakers and Suppliers on Fuel Economy
• OEMs clearly want relief and uniformity.
• Views of OEMs on ZEV regulations (even GM) are absolutely clear.
• GM is good cop/bad cop on fuel economy and EVs.
• OEMs are getting more from Trump Administration than they bargained
for.
• Oil industry sought and received favor from EPA on the regulation
revision.
• Several trade associations are speaking for suppliers, who have been
mostly silent as individual companies.
89
10
Vehicle Types
• Micro and Mild
Hybrids Including
48V
• Regular Hybrids
• Plug In Hybrids
• Full Electrics
• Fuel Cells
“Electrified” vs. “Electric”
11 is not understood by manyMAYBE!!
• Forecast is conservative based on products where vehicle characteristics are confirmed
Source: Baum and Associates US Electric Vehicle Forecast
12Automaker EV Strategies Technology Type Micro Hybrids Regular Hybrids Plug In Hybrids Battery Electrics Fuel Cell Vehicles Source: Baum and Associates Electric Vehicle Forecast 13
14
OEM EV Plans
• GM says it will introduce 20 battery electrics by 2023, with many of these
vehicles aimed at China where regulations are driving automaker intentions.
Marry Barra says GM will sell 1 million EVs globally by 2026.
• Ford has committed to 16 BEVs in five years.
• Investment in plug-ins and BEVs over the next several years is expected to be
at least $90 billion, with German automakers leading the way at $52 billion,
with $19 billion for the Detroit Three.
• Daimler, like many automakers, is making bold statements about
electrification. It wants all of its vehicles to have electric motors by 2022.
• BMW seeks to bring out twelve BEVs by 2025.
• VW is spending $7 billion on MEB platform for electric vehicles, which is a
derivative of its MQB architecture.
• VW to spend $800 million to build EV plant next to Chattanooga plant for 2022.
15Japanese OEM Plans
• Honda recommitting to electrification, particularly for its smaller
vehicles.
• Toyota is the technology leader in hybrids and is now expanding its
commitment to electric vehicles, given issues with fuel cells.
• Toyota is interested in solid state batteries with longer range and no
liquid cooling.
• Its TNGA platform is designed to accommodate electric vehicles.
• Nissan got in early and is moving forward.
16Uncertainty Ahead
• Regulatory uncertainty in US and Canada (?)
• Fuel prices low … for how long?
• ICE remains dominant, but at what costs?
• Electrification is broadly defined
• Battery development (including 48V) and charging technology
improving
• Will BEVs find their market?
• Product, product, product is coming, but will it sell?
• OEMs and dealers need to market products appropriately.
17Alan L. Baum
Baum and Associates, LLC
Tel: (248) 202-2629
abaum@baum-assoc.com
www.baum-assoc.com
Thanks, Dan!
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