Canada Auto Production Decline Amid Trade Tensions
The gleaming assembly lines that once pulsed with activity across Ontario’s automotive corridor now move at a markedly slower pace. Canada’s auto manufacturing sector has recorded its sharpest production decline in a decade, with output plummeting 11.3% in the first quarter of 2024 compared to the same period last year.
At Windsor Assembly Plant, where Chrysler minivans have rolled off the line for generations, temporary layoffs have become increasingly common. “We’re operating at about 60% capacity now,” says Michael Robinet, a 23-year plant veteran. “I’ve never seen uncertainty like this, not even during the 2008 financial crisis.”
The numbers tell a sobering story. Production volume has fallen from 1.9 million vehicles in 2017 to a projected 1.2 million for 2024, according to data from DesRosiers Automotive Consultants. This decline represents more than lost units—it signals a fundamental shift in North America’s automotive landscape.
Trade tensions lie at the heart of this manufacturing contraction. The implementation of the Canada-United States-Mexico Agreement (CUSMA) brought stricter rules of origin requirements, forcing automakers to recalibrate their supply chains. Simultaneously, ongoing disputes over aluminum and steel tariffs have inflated production costs by an estimated 7.2% across the sector.
“We’re caught in the crossfire of larger geopolitical forces,” explains Flavio Volpe, president of the Automotive Parts Manufacturers’ Association. “Canadian operations are often the first to feel the pinch when multinationals adjust to trade pressures. The challenge now is maintaining our position in continental production plans.”
Supply chain disruptions continue to compound these challenges. Critical semiconductor shortages have left assembly plants unable to complete thousands of vehicles. At GM’s Oshawa facility, nearly 3,000 pickup trucks sit in adjacent lots awaiting electronic components—a scene repeated across the country.
The decline has rippled through the supply base, affecting hundreds of smaller manufacturers. In Kitchener-Waterloo, precision metal stamping company TrimTech has reduced shifts from three to one. “We’ve lost 40% of our automotive contracts since 2021,” notes CEO Jennifer Haworth. “We’re desperately trying to diversify into other industries to keep our workforce.”
Government response has focused on electric vehicle production as a potential lifeline. Over $16 billion in EV-related investments have been announced for Canadian facilities since 2020, including Volkswagen’s battery plant in St. Thomas and Stellantis-LG’s joint venture in Windsor. However, these projects remain years from full production.
“The transition to electrification presents both opportunity and risk,” says Brendan Sweeney, managing director of the Trillium Network for Advanced Manufacturing. “Canada has secured important investments, but the volume of vehicles produced during this transition period remains a critical concern.”
For communities built around automotive manufacturing, the stakes couldn’t be higher. In Ingersoll, where CAMI Assembly has shifted to electric delivery van production, the workforce has shrunk by nearly a third. Local businesses report revenue declines of 15-25% as spending power diminishes.
Looking ahead, industry analysts project continued volatility through 2025. Recovery will likely depend on resolution of trade disputes, stabilization of supply chains, and successful implementation of new EV production lines. Until then, Canada’s position in the North American automotive manufacturing hierarchy remains precarious.
Will Canada’s automotive sector weather this perfect storm of challenges, or are we witnessing the beginning of a permanent structural decline? The answer will shape the economic future of communities across Ontario and beyond, determining whether the next generation of vehicles—and the jobs that come with them—will carry the “Made in Canada” distinction.
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