The Canadian auto industry is bracing for the direct impact of slumping U.S. auto sales that have reached their lowest point in 15 years.
A new report shows that U.S. sales of light vehicles in September dropped below one million for the first time since 1993, with 964,873 light vehicles sold.
By comparison, in September of last year, 1,314,982 were sold -- a slide of 26 per cent.
Carlos Gomes, an economist with Scotia Capital who focuses on the automobile industry, told CTV.ca that when the U.S. auto industry coughs, the Canadian market catches a cold.
"Close to 80 per cent of our vehicle production is geared to the United States and virtually all the parts produced either go into the U.S. or stay here," he said.
Heavily auto-dependent Ontario is especially vulnerable to falling sales in the U.S., he said.
"Close to 40 per cent of all of our exports from Ontario to the United States are auto-related, whether it's the assembled vehicles or parts that go into vehicles that are made in the U.S., so obviously a declining sales market in the U.S. will have an immediate impact here," Gomes said.
He noted that the impact in the province is almost immediate.
"It's fairly quick and we've already seen a significant drop-off in vehicle production in Ontario. I think we're probably 13 to 14 per cent lower than we were last year."
Ken Lewenza, the new president of the Canadian Auto Workers union, said the auto-sector in Canada has been hurting for a while but the latest news is disheartening.
"We've had a significant decline in the market in the last couple years, but last months numbers are just overwhelming," he told Canada AM on Friday. "So it means the bleeding in the auto industry hasn't stopped."
Lewenza said no manufacturer, domestic or foreign, will escape the significant decline in sales in the U.S. and the industry is hoping for a quick turnaround in that country's economy to boost consumer confidence.
The union leader points to plans in the U.S. to spend as much as US$50 billion on refacilitating existing car plants to create alternatives to fossil fuel burning vehicles.
"In Canada we have to ask and challenge our Canadian government well what are we doing?'" Lewenza said.
"If (the U.S. government) is giving them 50 billion dollars to refacilitate their plants at a time where corporations are downsizing, we could be left out long-term. There's short-term pain going on but forget the short-term pain, we need a long-term strategy to preserve the auto-industry in Canada."
Gomes said Canada's sales rates were actually up two per cent last month, though the gain was vastly overshadowed by the effect of the U.S. losses.
"We're definitely not seeing the same types of pressure that is occurring in the U.S.," he said.
"However, we are certainly seeing a little bit of moderation in terms of sales. We were at a record setting pace earlier in the year...you've seen some gradual easing off in the annualized sales pace."
U.S. September sales figures
The U.S. sales figures for September were provided by Autodata Corporation and posted on the auto-tracking website MotorIntelligence.com.
According to the data all of the major car manufacturers experienced losses between September 2007 and 2008. Suzuki posted one of the largest sales drops, at 46.6 per cent, while the Volkswagen group was among the lowest, at 8.2 per cent.
GM's sales were down 15.6 per cent, Ford was down 34.5 per cent, and Chrysler was down 32.3 per cent.
Even Toyota, which has remained strong largely due to its advanced fuel-efficiencies, saw a loss of 32.3 per cent.
Elite sports car manufacturer Maserati was the exception, actually increasing by 30.1 per cent, with total U.S. sales going from 153 cars in September 2007 to 199 cars in the same month in 2008.
