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1997- A Banner Year For Sales, Production

While vehicle output at the Canadian plants of Honda and Toyota reached new record
levels in 1997, all Japanese automakers in Canada were celebrating a remarkable sales
recovery which began in the last quarter of 1996. With renewed confidence, and attracted
by several exciting new models, Canadian consumers pushed sales up 36.2% for all JAMA
Canada members in 1997 over the previous year.

Sales

Overall, sales of Japanese brand light duty passenger cars and trucks reached 297,000
units, an increase of almost 80,000 units from 1996.

The top volume seller was Honda Canada, with just over 107,000 units, followed closely
by Toyota Canada with over 106,000 sales. Both were record levels for each. Subaru Canada
managed the largest year over year gain, up 60% over 1996.

Market share for JAMA Canada members rose to 21.3% from 18.0% last year. Passenger car
share hit 30.6% in 1997, while light trucks took a 10.8% share, a significant jump from
6.3% in 1996.

Production

Production at the three Japanese-affiliated plants in Canada reached a new high total
of about 383,000 units in 1997, up 4.6% over last year. Both Honda’s Alliston plant
and Toyota’s Cambridge plant reached record levels of 165,000 units and 108,000 units
respectively. CAMI in Ingersoll, assembled an estimated 110,000 units for 1997, down 12.7%
due to sluggish demand, primarily in the US market.

Exports

About 292,000 finished vehicles were exported from these plants in 1997, down 1.7% from
the previous year.

Both Honda and Toyota increased exports to new levels, while exports from CAMI declined
as a result of reduced output in 1997.

While most shipments went to the US, over 5,600 units went to other countries in Latin
America and Asia.

Canada continues to be a net exporter of Japanese vehicles as only 236,000 vehicles
were imported in 1997 from Japan, the US and Mexico combined.

Imports

Vehicle imports from Japan doubled in 1997 over the previous year after reaching a 25
year low in 1996. A total of 141,000 units were shipped to Canada as a result of renewed
consumer confidence and strong demand for several new models, especially sport utility
vehicles, currently only made in Japan. In spite of this, over 60% of all Japanese brand
sales in Canada were North American-built models, or three out of every five sales.

In 1997, vehicle imports from the US and Mexico continued to expand under NAFTA, up
21.1% to 94,800 units.

 JAMA Canada Members’ Vehicle Sales in Canada – January to December

Motor Vehicle Production in Canada

Motor Vehicle Imports from Japan

Motor Vehicle Exports from Canada

Motor Vehicle Imports from U.S./Mexico

Mixed Results in Japan for ‘97

It was an up and down year for automakers in Japan. Production and exports rose, while
domestic sales hit the skids.

Sales were buoyant before the consumption tax hike in April from 3% to 5%, but have
remained soft ever since. The tax, together with the currency crisis and a limping economy
in Japan were largely responsible for the slump.

Imports were hard hit, particularly ‘reverse’ imports made by Japanese plants
in other countries. However, some European automakers saw sales and market share expand in
1997 against the general trend.

While a weakened yen made exports more attractive, demand in several overseas markets,
Europe and North America in particular, was strong. Markets in Asia were suffering sharp
declines due to the currency crisis.

The outlook for 1998 is still sluggish. However in the aftermath of the Kyoto Summit,
hybrid and alternative fuel vehicles, many of which were featured at the Tokyo Motor Show
last fall, are attracting a lot of attention internationally as well as interest from
Japanese consumers.

Showa Announces Auto Parts Plant in Canada

On January 22nd, Showa Canada announced a $10 million investment for a new plant in
Schomberg, Ontario.

The 4000 square metre plant will begin production of shock absorbers early in 1999 for
the new Honda minivan, which is due to begin production later this year in Alliston,
Ontario. At the outset, Showa Canada will employ 80 people.

Showa Corporation of Japan is a major producer of shock absorbers and other automotive
parts. Showa has two plants in the US, and this is their first parts manufacturing
operation in Canada.

With expanding vehicle capacity at both Honda and Toyota, this is the eighth new auto
parts plant to be established in Ontario. Most will begin production this year or in 1999.

Auto Industry in Japan – 1997

JAMA Canada Brief on Auto Trade Policy

Comments on Canada’s automotive tariffs and trade policy were recently sent to
Industry Minister Manley and other officials as part of the consultation on the Federal
Government’s Automotive Competitiveness Review.

Key points made in the paper:

JAMA Canada Members Assist in Ice Storm Relief

When the Great Ice Storm of 1998 hit communities in eastern Ontario, Quebec and the
Atlantic region, Japanese automakers and dealers were pitching in to help out.

With power outages and people stranded, especially in rural areas, assistance came from
many quarters. Honda Canada donated 50 generators valued at over $300,000. Toyota Canada
and Toyota in Kentucky donated $100,000 and $70,000 respectively to the Canadian Red
Cross. Suzuki Canada and the Suzuki Canada Auto Dealers Foundation donated $50,000 to the
Red Cross, Quebec Division. Nissan Canada donated 10 vehicles particularly for getting
help to Seniors, through the Meals on Wheels program. Japanese auto dealers throughout the
affected regions volunteered to assist victims of the storm.

Japanese automakers’ regional offices as well as CAJAD dealers in Ontario, Quebec
and New Brunswick were fortunate to have experienced only minimal damage to vehicles and
property from the ice storm. A recent assessment suggests the biggest impact was lost
sales during the month of January.