Toronto, Ontario — In this week’s Tuesday Ticker, Ontario’s auto manufacturing sector braces for a bitter milestone as consumption looks set to outpace vehicle production, one of Canada’s best performing provinces–by total vehicle sales– saw three-digit sales in April, and Europe’s green sector blossoms with record-setting investment in EV businesses.
Manufacturing Sea Change
The Trillium Network for Advanced Manufacturing, a non-profit working to build the public’s understanding of the Ontario advanced manufacturing sector, has produced a new study showing that Ontario now consumes more new vehicles than it produces.
Last year, Ontario’s auto vehicle assemblies generated just $6.5 billion, about $750 million less than in 2018. According to Statistics Canada, Ontarians paid more than $12.5 billion for vehicles in 2019.
In total, the Province’s auto manufacturing sector had a gross product of $15.37 billion in 2019, with the majority of its profits coming from auto parts, not completed automobiles. But, while the total profits of Ontario’s auto sector may still outstrip spending on vehicles within the province, one Trillium Network figure says this could soon change.
While the closure of the Oshawa General Motors plant, which was shuttered at the end of 2019, will have a bigger impact on Ontario’s 2020 numbers than its 2019 numbers, the impact of the closure of auto manufacturing and production facilities as a result of COVID-19 could leave Ontarians spending more on automobiles than is earned from auto manufacturing.
In an article from the Winsdor Star, its managing director, Brendan Sweeney described the situation as a “Sea change.”
Auto parts manufacturers based in Ontario may have little to fear from the auto manufacturing sector’s decline. In fact, both Martinrea International and Magna International have seen their stock rise steadily since the economic collapse of early March.
Martinrea stock, which bottomed-out at $6.23 in late March, is now trading around $9.40. Magna Internation stocks are now trading around $60-per-share, after hitting the $35-dollar-mark in March.
Some industry analysts say this rise is the result of investors being wary of auto parts businesses entirely dependent on cross-continental supply chains.
Eastern Promises
Canada’s poorest province saw fewer than 1,000 vehicles sold in April, 2020–making it one of Canada’s best-performing provinces, Desrosiers Automotive Consultants has found.
According to the automotive sector research firm, Newfoundland and Labrador drivers bought just 902 automobiles in the first full month of the social isolation era, down from about 2,800 in April of 2019–a drop of about 66.5 percent.
Across Canada, both Desrosiers and the Canadian Association of Automotive Dealers have found a 75 percent reduction in total vehicle sales across the nation.
CADA also found that, as a result of this lack-of-business, 96 percent of auto dealerships had laid-off staff.
Western Investment
Europe now is bringing in more electric vehicle investments than China.
Last year, European businesses secured more than $90 billion in investments–almost three times more than China’s $31 billion, Belgian research non-profit Transport and Environment has found.
The news shows a major shift in the green economy, which has long been centred in China. Just two years ago, the same firm reported less than $5 billion of investment in EV projects across Europe. In 2018, investment sat just below the $30-billion mark.
Europe’s green sector has blossomed after the EU’s parliament announced plans to fine businesses with carbon footprints above 95g per kilometre, beginning in 2021.
