Canada’s auto parts industry had a good year in 2012, especially in North America, India and South Korea, according to a Scotiabank report. The sector showed double-digit gains over the previous year, enough to put it in eleventh spot in the ranking of world auto part exporters. Canada ranked eighth on that list in 2007.
However, outside of North America, the report says, auto parts exports were flat: fully 98 per cent of Canadian exports stay in North America. And Canada’s exports remain 20 per cent below where they were at the top of the previous economic cycle in 2007. The report says that this was one of the worst performances among the top auto parts exporting nations. US and global auto parts exports, in contrast, are more than 20 per cent above that cycle peak.
Canada lacks an effective strategy for developing markets outside of North America, the report says, and is more reliant on imported auto parts than the other top auto parts exporting countries. Each Canadian-built vehicle contains close to $15,000 in foreign-made parts, more than twice the global average of $7,400. Canadian-made vehicles have the highest content of imported parts among the vehicle-producing nations, the report says. This is largely due to the high volume of trade between Canada and the US, which in the auto parts sector amounts to about $40 billion a year. Engines are the largest auto part components imported into Canada.
Further, Canada’s share of global vehicle production has dropped “sharply.” In the 1990s, that share was one-third; today it is just 19 per cent.
Magna International, Canada’s largest auto parts maker, is being rated one of the top four stock picks on the NYSE with share earnings estimated at $1.54 for the current quarter. Revenue for the past twelve months has been $30.84 billion, according to benzinga.