Automotive News Canada - August 2019 - v2 - 5

* AUGUST 2019

On hold,
but hopeful
Industry waits while
companies in China
ponder a push for
assembly in Canada
By DAVE HALL

WINDSOR CORRESPONDENT

GLOBAL POLITICS, TRADE
tensions and the slowdown of new-vehicle sales have stymied talks aimed
at luring a China-based automaker to
Canada, but industry officials remain
Canada's detention of Huawei
optimistic that a new assembly plant
CFO Meng Wanzhou has stalled
could eventually land in Ontario.
discussions with China-based
Discussions between the
automakers about assembling cars
Automotive Parts Manufacturers'
in Canada, said Flavio Volpe of the
Association (APMA) and China-based
Automotive Parts Manufacturers'
car companies had been going on for
Association. F I L E P H O T O
three years until Canada's detention
last December of Huawei CFO
Meng Wanzhou, said APMA
Automotive Research (CAR) in Ann
President Flavio Volpe.
Arbor, Mich.
"It's clear the Chinese believe that
Meng's detention also has
Ontario is competitive; otherwise, I
hampered efforts by Ottawa
never would have gotten past the first
to negotiate a free-trade deal
conversation," Volpe said, adding that
with China, which seeks greatthe federal and Ontario governments
er access to Canada's oil sands. As
also were holding separate meetings
a condition to granting that access,
with the manufacturers.
Volpe has urged federal
"But now all talks are on
negotiators to secure auto
hold, and that sets back the
investment commitments in
process until the Chinese
this country from the
government is satisfied with
Chinese.
the outcome of the Huawei
Despite the setback,
situation."
analysts interviewed
Meng was detained at
by Automotive News
the request of U.S. governCanada say it's just a matment officials who have
ter of time before Chinacharged her and the Chinese
based auto manufacturers
China-based
telecom giant with trying to
either begin selling cars -
automakers
circumvent U.S. sanctions
through distribution netare looking
against Iran.
works - or locate plants in
to establish
North America.
beachheads in
THE BIG TEN
U.S.-China trade tensions
Canada and/
could work in Canada's
For competitive reasons,
or Mexico while
favour, said Michael Dunne,
Volpe declined to name the
they wait out
CEO of ZoZo Go, a U.S.-based
automakers he had been
U.S.-China trade
research firm that tracks
meeting with, but said they
tensions, said
China's auto industry.
are among the largest in the Michael Dunne,
"The Chinese automakcountry.
CEO of research
ers have not given up their
The 10 biggest
firm ZoZo Go.
ambitions to go global, so
China-based automakPHOTO: ZOZO GO
they begin to look for the
ers by sales volume are:
path of least resistance," he said. "In
SAIC, Geely, Changan, Dongfeng,
the last 12 months we've seen autoBAIC, Great Wall, Chery, FAW, GAC,
makers begin talks both with Mexico
and BYD, according to the Center for

CHINA-BASED AUTOMAKERS IN NORTH AMERICA
* At least eight automakers from China have set up design and r&d operations
in the Detroit area, according to the Michigan Economic Development Corp. They
are: Guangzhou Automobile Group and Great Wall Motors in Farmington Hills,
FAW Group in Troy, SAIC Motor in Sterling Heights, BAIC in Hamtramck, Changan
in Plymouth, Guangzhou Automotive in Farmington Hills and Bordrin Motor in Oak
Park.
* China-based investors own a number of Ontario-based parts suppliers, including
Windsor-based Valiant Tool and Machine, JCI Automotive, Meridian Lightweight
Technologies, Henniges Automotive and Wescast Industries.
* Geely has a design centre in California; Guangzhou an r&d arm in Irvine,
Calif.; and BYD an electric-bus plant in Lancaster, Calif.
* In June, BYD opened a 45,000-square-foot (4,180-square-metre) electric-bus
assembly plant in Newmarket, near Toronto. - Dave Hall

Analysts think it's just a matter of
time before China-based automakers
either begin selling cars or locate
plants on the continent.

and Canada as sort of staging
areas. ... 'How do we get a foothold
in North America while we bide our
time and hope U.S.-China trade tensions cool down? Let's first establish
ourselves in either Mexico or Canada
or both.'"

I L L U S T R AT I O N F R O M
ISTOCK PHOTOS

volume of sales to make assembling
here more feasible than shipping."
Fleet vehicles also might be a shortcut into the market, McCabe said. He
cited the recent announcement by
BYD Auto Co. - China's largest manDECLINING SALES
ufacturer of electric vehicles, buses
But China's fragmented indusand trucks that is backed by
try might mean seven to 10
Warren Buffett's Berkshire
years before its vehicles
Hathaway - to build an
are assembled in North
electric-bus plant in the
America.
Greater Toronto Area.
David Adams, president
"The EV bus puts them
of Global Automakers of
in the electrification space,"
Canada (GAC), said ChinaMcCabe said. "For that reabased automakers are conson alone, I could see them
centrating on their home
testing the waters."
market, which is the largest
Ted Dowling, vice-presion the globe.
David Adams
dent of BYD Canada, said in
"Sales in China have levof Global
a statement the new facility
eled off, and I don't think
Automakers of
will "put Canada on the map
immediate export marCanada thinks
as a North American leader
kets are top of mind,"
China-based
in electric bus assembly.
Adams said.
automakers are
"BYD is well-positioned
"Their market has so
too preoccupied
to
replicate
in Canada
many companies competwith sales in their
the kind of rapid growth
ing for sales, and it won't be
home market to
we've seen in places like
easy to achieve enough sales devote attention
in North America to make
to export markets Lancaster, Calif., a plant
which started with about
building vehicles here feasi- such as Canada
100 workers in 2013, and
and the United
ble in the short term."
States. F I L E P H O T O now employs more than
Qiang Hong, senior
750," Dowling said.
research scientist at CAR,
One tipoff about when
said after a decade of annuthe China-based compaal double-digit growth, sales
nies might consider assemin China fell by 2.8 per cent
bly-plant investment in
in 2018 to about 28 milNorth America is if their
lion passenger and commerfragmented market begins
cial units compared with the
consolidating or develprevious year, and they're
oping joint ventures outexpected to plunge between
side China, said Brendan
10 and 15 per cent in 2019.
Sweeney, a researcher at
"Economic trends in
McMaster University's
China have slowed down and Qiang Hong,
Automotive Policy
senior
research
international trade issues
Research Centre.
scientist at
have had a lot of impact on
Chinese investors have
the automotive market," said the Center for
already
purchased OntarioAutomotive
Qiang.
based auto parts suppliers.
Research, said
As recently as the end
China's auto sales Valiant Machine and Tool
of last year, six automakwas bought by HCD Group,
are expected
ers had announced plans to
and JCI Automotive,
to continue
enter the U.S. market, said
Meridian Lightweight
dropping.
Dunne. "Five of the six have
Technologies became part
PHOTO: CAR
announced delays ... only
of Wanfeng Auto Holding
Zotye remains committed to
Group.
entering the market, in late 2020."
Such investment has slowed in the
past two years, Sweeney said, but no
EV ENTRY POINT
retrenching has occurred, either.
After Toyota, Honda and
Another possible jurisdiction for
Nissan began selling vehicles in North
an assembly plant is California, which
America, they were the only Japanrecently was chosen to become the
based companies big enough to justiheadquarters of Guangzhou
fy building assembly plants in Canada
Automobile Group, said McCabe.
and the United States.
California is the most logical U.S.
They all made inroads in North
state because it has emerged as a
America initially by manufacturing
major customer base for importsmall vehicles, said Joe McCabe, CEO
ed vehicles, particularly those from
of AutoForecast Solutions LLC.
Japan and South Korea, he said.
"They found a niche in the marBut, Ontario's established cluster
ket, and it remains to be seen if the
of assembly plants, parts suppliers,
Chinese can find a similar niche to
and experienced workforce, makes
drive sales. There's also the issue of
it the most attractive province for
building brand awareness, setting up a
investments by China companies, he
dealer network and getting to a certain
said. - ANC

Automotive News Canada - August 2019 - v2

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