After the United States, Canada represents the second largest automotive market in North America. Ownership of light vehicles under 4,500 Kg in Canada has increased by an average of 1.7% year-over-year to 22.7 million in 2017, since 2013 (StatsCan). In the next 5 years, the Canadian light vehicle fleet of this category is expected to reach 24.3 million registered vehicles in 2022. The relationship that Canadian and U.S. production facilities have forged over the years makes Canada the largest industry trading partner for the U.S. Roughly $53.17 billion in automobile, light and heavy-duty motor vehicles, bodies and auto parts were exported to the Canadian market by the United States in 2018, representing approximately 64% of the respective total Canadian imports. The U.S. exports of new Automobiles and Light Duty Motor Vehicles to the Canadian market amounted to $22.7 billion in 2018 and this is not including the U.S. Original Equipment Manufacturers (OEMs) sales to Canada of U.S. vehicles assembled in Canadian assembly lines.
Canada
Summary
I 35 I
Canada Motor Vehicle and Parts Imports from the U.S. (in USD millions)
Total new passenger vehicle/light truck 21,746
Total medium/heavy duty vehicle 4,355
Motor Vehicle Body and Trailer
Total auto parts imports
Source – Industry Canada NAICS 33611, 33612, 33621, 3363
Market Entry
Currently, there are no barriers in the bilateral trade in the automotive sector. Most automotive parts originating from the United States that meet NAFTA rules of origin are exempt from duty. Also, manufacturing and safety standards for vehicles created for each respective market are practically identical. The new USMCA agreement maintains the tariffs but increases the North American content required to qualify for the rule of origin.
Barriers
Canada Motor Vehicle Sales 2018 (units)
Passenger Car
Light Truck
Total
Source: Desrosiers