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JAMA Canada Annual Review 1999

Chairman's Report

It is a great pleasure, as the Chairman of JAMA Canada, to be publishing our 1999 Annual Review of the Japanese auto industry in Canada. JAMA Canada was established in 1984 to promote greater understanding on economic and trade issues in the motor vehicle sector. We hope this report will contribute to this objective.

Overview of 1998

For JAMA Canada members as a group, 1998 was a superlative year in terms of new vehicle sales, as well as production and export of motor vehicles in Canada. On the heels of record sales growth in 1997, units sales of JAMA Canada members reached a new peak of 330,000 in 1998 surpassing the previous sales record of 325,000 units set in 1991. The key difference between sales records in 1991 and 1998 is the fact that last year about 54% of all Japanese brand sales were built in North America, compared to only 20% in 1991.

The factors behind this performance included a robust level of consumer confidence, low interest rates, stable prices together with rising demand for certain kinds of new vehicles, particularly light trucks, vans and sport utility vehicles. For example, in 1998 Japanese brand passenger cars sales increased 9%, but light truck sales jumped 17% over the previous year. What's more, almost all of the increase in light truck sales were models built in North America.

Production at Japanese affiliated plants in Canada also attained new heights in 1998 as output rose 3.4% overall to just under 400,000 units. The gain stems largely from higher capacity at both Honda of Canada Manufacturing and Toyota Motor Manufacturing Canada as new and renewed plants were opened in 1998. And due to high levels of integration in North America, about 76% of total output was exported, or about 300,000 units. Most exports went to the United States, while about 6,000 units were shipped to third countries.

Looking at overall performance as a group, Japanese automakers produce more than one vehicle in Canada for every one sold in Canada, and we export from Canada more vehicles than we import from Japan, the US and Mexico combined. When all current expansions are completed early in the new millennium, total production capacity will exceed 700,000 units annually.

There have been remarkable and dramatic changes since the mid-1980's when Japanese automakers began to establish manufacturing in Canada, and the ongoing growth in vehicle and parts production in Canada is a clear and unequivocal vote of confidence in the future of the Canadian auto industry.

Highlights of 1998

Among the key events of last year from JAMA Canada's perspective were the openings of Honda's second assembly plant in Alliston, Ontario where the new Odyssey minivan is being built, and the re-opening of Toyota's first plant in Cambridge, Ontario which is now making the Camry Solara. Both vehicles are being exclusively produced in Canada.

JAMA Canada participated in the 21st Canada Japan Business Conference that was held in Karuizawa, Japan in 1998. The association also continued the liasion and communication activities that were transferred from PAC following the closing of its office in Canada in 1997. These activities included assisting in arrangements for two APMA (Automotive Parts Manufacturers Association of Canada) missions to Honda in Marysville, Ohio and Toyota in Georgetown, Kentucky, as well as a Keynote Speaker from Honda Motor Co. Ltd., Japan for the 1999 APMA Annual Conference.

With respect to trade policy issues in 1998, JAMA Canada submitted a brief to Industry Minister John Manley outlining our views on automotive tariffs and trade policy for the Federal Government's Automotive Competitiveness Review. Our brief advocates fair and equal treatment for all automakers in Canada through open, transparent and non-discriminatory trade policies consistent with the GATT/WTO, as well as reduced tariffs on finished vehicles, a measure that will benefit Canadian consumers. At the current time, Canada's Most Favoured Nation tariff applied to passenger vehicles, while modest by international comparison, is higher at 6.1% than either the US at 2.5% or Japan at 0%.

While Minister Manley released the results of the Automotive Competitiveness Review in a report last June, JAMA Canada was very disappointed to see that there were no changes in the current policies or procedures that treat some companies more favourably than others. As there was no change as a result of Canadian Government's policy review, last summer both the Governments of Japan and the European Union requested dispute settlement panels at the WTO to try to resolve this matter by reference to international trade rules. The results of the panel are expected later this year.

On behalf of the members of JAMA Canada, I hope this annual review will be useful in understanding the activities and views of the Japanese auto industry in Canada. We welcome any comments, suggestions or questions.

Yoshio Nakatani


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