Japanese brands invest billions and employ thousands
When Japanese automobile manufacturers entered the Canadian market in the mid-1960s, their initial aim was to set up distribution, sales and service facilities for local customers, with the vehicles still built in Japan and shipped across the Pacific Ocean. Fifty years later, those tentative first steps have evolved into a presence that is critical to both the overall Canadian economy and the companies with a stake in the North American market.
“In the decades since Japanese car companies arrived in Canada, there have been some dramatic changes in consumers’ needs, technology, manufacturing, supplier relations, trade policy, regulation, energy, the environment, vehicle design and vehicle safety, all of which have offered new opportunities for growth,” said David Worts, executive director of the Toronto-based Japan Automobile Manufacturers Association of Canada (JAMA Canada).
“And while the automotive market is relatively small, Canada provides a stable and supportive government that is based on the rule of law, as well as an open and highly trade-dependent auto industry that, since 1965, has been dominated by foreign ownership and investment,” he told The Canadian.
“Equally, Japanese-brand vehicles — whether they have been built in Japan, Canada, the United States, Europe, Mexico or elsewhere — are appreciated by consumers in Canada for their reliability, their design, quality, fuel efficiency, safety and environment-friendly technology,” he added.
The statistics also make impressive reading, he pointed out.
In 2017, more than one million Japanese-brand vehicles were built in Canada, for the second consecutive year, while two of the top three Canadian producers were Japanese. Over the course of the year, JAMA Canada member firms sold no fewer than 719,806 light-duty vehicles, a record sales figure for a fourth straight year, and market share rose to 35.3 per cent.
Canada exported more than four times as many vehicles as were imported from Japan in 2017, and since 1993, Canada has exported 4.7 million more Japanese-brand vehicles than were imported from all other countries combined.
Japanese vehicle manufacturers are also major employers across Canada: 1,238 dealers representing Japanese brands employ an estimated 44,500 Canadians in sales, service and repair. And while direct and indirect employment in the Japanese auto industry in Canada stood at around 80,000 people in 2017, a recent study has determined that Japanese vehicle manufacturers support more than 202,000 jobs across the country.
Underlining the robustness of Canada as a manufacturing hub for Japanese firms, Toyota Motor Corp. announced in May that it will carry out a C$1.4 billion upgrade of two of its Canadian manufacturing plants. The improvement — which includes C$220 million contributed by the federal and Ontario governments — was announced by Prime Minister Justin Trudeau at the Toyota facility in Cambridge, Ontario.
“These measures support Canada’s competitiveness and build our capacity to do the kind of advanced automotive research and production that companies like Toyota want more of,” Trudeau told staff at the plant, The Province newspaper reported.
When the upgrades are completed, the Cambridge plant and the factory at Woodstock, also in Ontario, will become Toyota’s North American manufacturing hub for the RAV4, including hybrid versions. The investment is expected to create 450 new jobs and as many as 1,000 student and intern positions, while Toyota has also committed to spending C$200 million on research and development in Canada over the next decade. At present, the two plants employ about 8,000 people and more than half a million vehicles roll off their production lines each year.
“Japanese-brand vehicles … are appreciated by consumers in Canada for their reliability, their design, quality, fuel efficiency, safety and environment-friendly technology.”
Toyota started selling its Crown, Publica and Land Cruiser models in Canada in 1965 and the company says it is committed to building vehicles where it sells them. “The vehicle models we manufacture in Canada account for nearly half of all the vehicles we sell in the country and we are a net exporter of vehicles,” said Stephen Beatty, corporate vice president of Toyota Canada Inc. “Toyota has been building cars in Canada since 1988 at Toyota Motor Manufacturing Canada Inc. and now with three assembly plants in Cambridge and Woodstock, Ontario, over eight million vehicles have been made in Canada since then.”
The company’s truck/SUV segment is faring well and the RAV4 has proved a popular compact SUV in Canada. “We have a broad line-up of vehicles in Canada, to meet the different needs of our Canadian customers,” said Beatty.
Toyota has invested some C$11.5 billion in Canada since it first arrived and has 22,300 employees across every province. In 2017, the company set a new sales record with 224,547 Toyota and Lexus vehicles sold, while it also set a record for hybrid vehicles, with 20,287 units sold.
Honda Motor Co. got a foot in the Canadian door in 1969, initially with motorcycles and power equipment, before the Tokyo-based company’s cars began to win a following. The first Honda Canada manufacturing facility was opened in 1986 in Alliston, Ontario, followed by a second plant at the same site two years later. A C$154 million engine plant was completed in Alliston in 2008 and the company now employs 19,000 Canadians, purchases C$2.1 billion worth of goods from Canada-based suppliers each year and supplies vehicles to Mexico, China, South American countries and the United States.
And Canadian consumers love the country’s vehicles. The Honda Civic received the 2018 Canadian Green Car Award in April, two months after the Accord had been named Canadian Car of the Year.
Nissan Motor Corp. was the first of Japan’s automakers to incorporate in Canada. It started with only six employees in Vancouver in January 1965, but signed up 84 dealers across the country in its first year, and sold more than 1,200 Datsun brand cars and pickups, the first compact pickups available in North America.
One year later, Nissan Canada Inc. opened its Ontario office. “Although Nissan does not have any manufacturing sites in Canada, Nissan Canada and its dealers — 206 Nissan dealers and 42 Infiniti retailers — add substantially to the economy, providing more than 4,800 jobs directly related to selling and servicing Nissan products across Canada,” said Didier Marsaud, director of corporate communications at Nissan Canada.
“On a corporate level, Nissan employs more than 350 people, but Nissan’s efforts to impact the Canadian community in a positive way reach beyond the walls of its offices and dealerships,” Marsaud added. “This year, the Nissan Canada Foundation is celebrating its 25th year in Canada and over the past 10 years, Nissan employees in Canada have logged over 10,000 hours of giving back to the communities with local food bank and Habitat for Humanity partnerships.”
The top-selling Nissan model in Canada in 2017 was the Rogue crossover, which sold 43,481 units, up 8.4 per cent on the previous year, followed by sales of 15,120 Murano crossovers and 13,883 units of the Sentra sedan. The company also has high hopes for the Qashqai sub-compact SUV in the coming year. It sold 8,970 units in seven months.
“This very much reflects ongoing consumer preferences in Canada: the compact crossover segment is the country’s largest volume segment,” said Marsaud. Nissan, like other manufacturers, also makes sure that its vehicles are well prepared for the local environment, with the Micra subcompact — fitted with adapted suspension, 60/40 split rear seats and rear heating ducts just for Canada — an excellent example.
Mazda Motor Corp. also has a long and storied history in Canada, this July having celebrated 50 years of operations in Canada. Vancouver was once again chosen for the initial headquarters and Canada was the firm’s second overseas subsidiary after Australia the previous year. The company debuted with its R-100 rotary engine coupe.
“Since the Mazda3 was launched in 2004, it has perennially been the best-selling model in Mazda Canada’s line-up,” said spokeswoman Yukari Hara. “However, we’ve seen a shift in Canadian auto sales over the past couple of years where light trucks are now outselling passenger cars for the first time.”
That has been accompanied by a shift towards SUV sales, and the CX-5 was Mazda’s best-selling model in the first quarter of 2018, she said.
Mazda is aiming to increase loyalty to its brand, with customer experience critical to achieving that aim. “We have great products; now we’re working on ensuring we provide a premium experience to consumers at all touch points to match the product, whether it be at a Mazda dealership, interacting with our head office, or visiting our website,” said Hara.
Each of the companies that commented for this story expressed optimism that their high-quality products, combined with technological innovation and a clear commitment to the market, mean that the outlook for their brand in Canada is very positive.
The only fly in carmakers’ ointment at the moment, it seems, is protectionist measures being introduced in Washington, while U.S. President Donald Trump has announced plans to renegotiate at best, or scrap at worst, the North American Free Trade Agreement (NAFTA).
“NAFTA is a brilliant system, fashioned like a very precise and beautifully intricate watch,” said Ron Haigh, former chairman of the Canadian Chamber of Commerce in Japan and now project manager for Toyota’s Overseas External Affairs Division. “It allows each and every North American car manufacturer to flexibly use locations in the U.S., Canada and Mexico to produce a wide variety of reasonably priced vehicles by different locations working together as one team. They are supported by an extensive parts supply network that allows North American cars to compete with those made in any other place in the world.
“NAFTA is a brilliant system, fashioned like a very precise and beautifully intricate watch.”
“NAFTA is a very good deal for Canada but also for Mexico and the U.S.,” Haigh emphasized. “For example, since NAFTA started, Toyota have gone from two to soon 11 plants in the U.S. and over the last four years, employment at both parts suppliers and dealers has increased almost 20 per cent. We have invested US$1 billion over the last three years in Canada, but we are also investing billions and billions in the United States.”
Japanese car makers with operations in Canada that feed into the United States and other markets say they are optimistic that a positive outcome can be achieved and they can continue to provide their customers with top-quality vehicles at competitive prices.