OTTAWA—Auto parts production is projected to jump 5.2 per cent this year thanks to booming vehicle sales on both sides of the border, according to the Conference Board of Canada’s latest outlook.
In its Spring 2014 Industrial Outlook, the think-tank that Canadian vehicle production will also rise this year, by 3.1 per cent, after assembly at plants in the country fell 3.6 per cent in 2013 in the wake of retooling an increased competition from facilities in the United States and Mexico.
The Conference Board expects Canadian automakers to post pre-tax profits of $1.3 billion in 2014—the highest level since 2002.
“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.”
Parts producers in Canada are expected to generate pre-tax profits of $1.5 billion this year.
The growth the think-tank expects the industry to experience this year will also spill into 2015, according to the report, with the auto manufacturing sector adding roughly 2,900 jobs next year.
It’s not all good news on the horizon, though, as the Conference Board projects that Mexico will surpass Canada in vehicle exports to the U.S. for the first time next year.