Booming vehicle sales in both Canada and the U.S. are expected to increase auto parts production by 5.2 per cent this year, according to the latest figures from the Conference Board of Canada.
Pre-tax profits for Canadian auto manufacturers are expected to reach $1.3 billion this year, their highest levels since 2002, according to the Conference Board’s Spring 2014 Industrial Outlook publications.
The recovery in Canadian vehicle production follows last year’s production decline due to retooling, the Conference Board said, and motor vehicle manufacturing will experience a strong year in 2014.
"It was a chilly start to the year for car sales but the spring thaw has brought customers back to the car lots at record-breaking levels," Jacqueline Palladini, senior economist with the Conference Board, said in a statement. "American consumers, in particular, are replacing their older vehicles due to a steady increase in income, jobs, and credit availability."
The Conference Board also noted that a lower, 90-cent Canadian dollar will add to revenues and boost profit margins, due to the high export share of the Canadian auto parts industry.
The 2014 industry growth will also spill into 2015, the Conference Board said, with the auto manufacturing sector adding roughly 2,900 jobs next year.
The only downside? The Conference Board projects that Mexico will surpass Canada in vehicle exports to the U.S. for the first time next year.