What to expect in the year ahead
We are approaching the end of a tremendous growth cycle in the Canadian auto industry, but who knows what’s next?
Ah, Canadian car sales. You are now as defiant as our real estate market.
The year 2015 will most likely turn out to be a record year, despite some forecasts that pointed otherwise (including mine).
Predicting car sales in North America may have become as much a game of chance as statistical prescience, but I think we can expect this year to be equally strong. Our economy is not going anywhere but neither are our lending rates. So, cheap credit will continue to spur buyer buoyancy in parts of Canada that are not Alberta.
But we are also approaching the end of a tremendous growth cycle — economists believe 2017-18 will finally slow down the party. But who knows?
Other industry trends seem a little more certain. Here’s my take on what 2016 may bring: High-stakes union negotiations at three Canadian plants This year’s contract talks between Unifor and the Canadian production arms of the Detroit Three will determine our industry’s future — there’s more at stake than ever before. Oshawa has lost the Camaro with no new vehicles announced. That means that the union will be up against the wall trying to balance job losses and the fate of remaining workers. Things are uncertain as well at Chrysler’s Brampton unit, which again means that workers will likely have to make concessions to secure new lines and upgrades. The only things working in favour of Unifor are rising wages at U.S. plants and the weak loonie. Ontario turns autonomous If you spot a moving car without a driver, don’t panic.
That may just be Google, or some other automaker, testing out selfdriving vehicles on our streets. As of now, the use of autonomous vehicles has become legal in Ontario. It’s hard to say who will bite first — my money is on Toyota — but the policy move is surely a welcome one. At the very least, we can be sure that when robot vehicles finally arrive, they will know their way around a true north winter. Automotive profits continue Never mind falling production (no growth is expected this year), the Canadian car and components industry will reap the benefits of our higher value exports. Profitability is likely to increase by 1520 per cent this year, with the possibility of getting pretty close to the $3-billion mark. Anew low for oil? Most analysts think the going price for oil prices will get much worse before things start to improve by the end of the year. Some are saying we might even go as low as $25 to $30 a barrel. That may introduce more softness to the Canadian economy but it won’t be enough to take the wind out of car sales. Canadians like ’em big For a while, when oil crossed the $100-a-barrel mark, it seemed like we’d all be riding around in micro cars and green machines. Such pipe dreams. Trucks and SUVs continue to break records, and their appeal will only grow this year. That’s not necessarily bad for the environment as many of the big boys have come a long way in efficiency. But it’s definitely good for Canadian auto production, as building them big is kind of our niche. More woes for VW The year 2015 was simply a sneak peek into Volkswagen’s diesel crisis. The truly painful drama will actually unfold over the course of this year. Names will be taken, fines will be announced and there may even be a few criminal convictions. We’ll get to know the actual toll this will take on the German company’s business and brand. Tesla takes it to a new level Full electric vehicles are still niche. But Elon Musk has a vision of being the Henry Ford of EVs. His company’s production facility-in-progress — the Gigafactory in Nevada — is expected to kick off mass-scale production of lithium ion batteries by the end of the year. The ultimate goal will be to create enough momentum and capability to build about 500,000 Tesla cars in that plant by 2020. 3-D-printed car goes on sale Tesla too cookie cutter for you? You might want to hear from Local Motors. The Arizona-based company showcased its 3-D-printed car called Strati at the Detroit Auto Show last year. Local is now saying that its cars will be available for preorder this year with delivery expected in 2017. Its car will be fully customizable by the buyer — essentially, the customer will build it from scratch on a digital platform which will then be manufactured using state-of-the-art 3-D printing technology. Kumar Saha is a Toronto-based automotive analyst with the global research firm Frost & Sullivan.