CNW Group/KPMG LLP
Canada’s automotive industry is undergoing a structural reset as prolonged trade uncertainty and U.S. tariffs force manufacturers and suppliers to rethink costs, supply chains and technology investments, according to a new report from KPMG Canada.
Based on a national survey of automakers, parts suppliers and dealers, the report finds four in 10 respondents believe their businesses will emerge stronger over the next three years, while nine per cent expect their operations to fail. Another 17 per cent say their organizations will be completely transformed, and 12 per cent anticipate consolidation or acquisition.
“We’re seeing a foundational and irreversible transformation underway in the Canadian auto sector,” said Dave Power, partner and national automotive sector leader at KPMG in Canada, in a statement. “The implications down the supply chain and across the economy will be significant, but the industry, especially the more established players, have dealt with high levels of disruption before.”
Operational stability is now the top priority. Eighty-two per cent of manufacturers and suppliers say they are adjusting their supply chain strategies, while 70 per cent are exploring international markets. At the same time, 63 per cent report raising prices in response to tariffs, and 62 per cent say they have substantially changed their product mix to reduce exposure.
Technology investment is accelerating. Nearly 69 per cent of respondents are investing heavily in artificial intelligence, and 20 per cent report AI-driven productivity gains of more than 25 per cent. Advanced technology and software integration was cited as the biggest opportunity for the sector by 44 per cent of respondents.
“Canada’s automotive industry is under intense cost pressure from U.S. tariffs on car parts, steel and aluminum,” said Joy Nott, partner, trade and customs, KPMG in Canada, in a statement. However, she noted Canada’s network of 15 free trade agreements could help offset uncertainty by opening doors to new markets.
