National automotive sector impacted by global crises
The depletion of vehicle demand due to the COVID-19 pandemic has led to a global chip shortage throughout 2021. While the Canadian automotive industry had been recovering from national lockdown measures, its sector suffered from this shortage. The inventory value of motor vehicle manufacturers in Canada shot up to almost 2.1 billion Canadian dollars in April 2021 (around 1.61 billion U.S. dollars) before dipping by over 30,000 dollars, down to under 1.8 billion Canadian dollars (1.38 billion U.S. dollars) in December that same year.Canadian vehicle production dropped across all segments in 2021, despite an increasing demand for cars and trucks. Light commercial vehicles were the most impacted, with the country’s van output decreasing by 21.3 percent in 2021. To offset these production issues, Canada increased its motor vehicle and parts imports in 2021, up to 69.3 billion U.S. dollars. Compared to 56.3 billion U.S. dollars in motor vehicle and parts exports, Canada recorded a negative trade balance. This reliance on imports has, however, led the country towards another challenge: In February 2022, auto manufacturing plants—including Ontario-based plants owned by Stellantis, Toyota, and Ford—were also forced to halt or slow down production as protests shut down the Ambassador Bridge, limiting access to motor vehicle parts.
Focus on zero-emissions needs time
Zero-emission vehicles (ZEVs) are becoming an increasing focus in the country. Canada aimed for zero-emission vehicles to represent the totality of new sales by 2035. Fourteen years away from this target, ZEVs represented 5.2 percent of new vehicle registrations.Hybrid electric vehicles—running primarily on an internal combustion engine, with some reliance on electricity—were the most popular new energy motor vehicle types in Canada in 2021. At some 79,300 sales that year, the segment recorded over seventeen times fewer new registrations than gasoline vehicles. While ZEV registrations are steadily growing—including a 14 percent increase in battery-electric cars through the pandemic—Canada has still only progressed around 5 percent toward its 2035 targets.
