WWW.THEICCT.ORG© INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION, 2018
Automobile production in Canada and
implications for Canada’s 2025 passenger
vehicle greenhouse gas standards
Authors: Dan Luria, Occupy Dan, LLC, Alan Baum, Baum and Associates, LLC, Ben Sharpe, The International Council on
Clean Transportation
Date: April 10, 2018
Keywords: Canada, passenger vehicle manufacturing
1. Introduction
The current U.S. regulations for passen-
ger vehicle greenhouse gas (GHG) and
fuel eciency were finalized in 2012
and called for cars and light trucks
collectively to achieve a projected fuel
economy level of 54.5 mpg by 2025.
1
On April 2, 2018 the U.S. Environmental
Protection Agency (EPA) announced
2
that this regulation was “not appro-
priate and should be revised.” We
expect the EPA and U.S Department
1 Using EPA and NHTSA laboratory
calculations, the 2025 emissions/fuel
economy target is often stated as 54.5
mpg. However, the target is sensitive to
the car-truck sales mix and, moreover, is
roughly one-third above the mileage actually
experienced by drivers due to the testing
regime and a variety of credits. Changes in
car-truck mix have already caused the 54.5
mpg target to fall to about 50, corresponding
to about 38 mpg in actual driving. Note that
in this paper we separate trucks into car-like
trucks (“CLTs” or “crossovers” built on car
platforms) and true (i.e., framed) trucks (TTs)
built on truck-only platforms.
2 US. Environmental Protection Agency,
“EPA Administrator Pruitt: GHG Emissions
Standards for Cars and Light Trucks Should
Be Revised,” news release, April 2, 2018.
https://www.epa.gov/newsreleases/epa-
administrator-pruitt-ghg-emissions-standards-
cars-and-light-trucks-should-be
of Transportation (DOT) to issue a
proposed rulemaking later this year
with weakened 2025 requirements.
Canada’s regulation incorporates the
U.S. EPA rule by reference and thus
would have its standards rollback
automatically as soon as any adjust-
ments are made to the U.S. program.
With Canada having a long history of
harmonizing its vehicle and fuel reg-
ulations with the U.S., the probable
rollback of U.S. vehicle GHG standards
will immediately trigger a decision
point for the Canadian government:
continue the policy of aligning with
the U.S. and thus weaken its own 2025
regulation; or, break regulatory ties
with the U.S. by maintaining the strin-
gency of the current 2025 standards.
California, which has both a progres-
sive political culture and serious air
pollution issues in many of its cities,
has announced
3
that it will stick with
3 California Air Resource Board, “CARB Chair
Issues Response to EPA press release on
weakening vehicle standards,” news release,
April 2, 2018. https://ww2.arb.ca.gov/news/
carb-chair-issues-response-epa-press-release-
weakening-vehicle-standards
the original target for 2025. Thirteen
other states, plus the District of
Columbia (hereafter, “CA+13”), have
opted to follow California’s lead on
vehicle emissions standard in lieu of
those at the federal level. These states
include: Connecticut, Maine, Maryland,
Massachusetts, New Jersey, New Mexico,
New York, Oregon, Pennsylvania,
Rhode Island, Vermont, Washington,
and Delaware, plus Washington, DC.
Altogether, there were roughly 6.2
million passenger vehicles sold in
California and the other 13 states in
2016. Adding an additional 1.9 million
vehicles sold in Canada, this combined
bloc of 8.1 million units represents
roughly 41% of the total market for cars
and light trucks in the U.S.-Canadian
market (19.8 million vehicles).
This paper analyzes the Canadian
vehicle manufacturing market and
sales patterns to illuminate the possible
impacts if Canada weakens its green-
house gas emission standards in order
to align with the U.S. federal govern-
ment or maintains its existing stan-
dards and aligns with California and,
WORKING PAPER 2018-07
Acknowledgments: This work is supported by the Bekenstein Foundation. Drew Kodjak and John German of the ICCT provided valuable input to the
development of this paper.
AUTOMOBILE PRODUCTION IN CANADA AND IMPLICATIONS FOR CANADA’S 2025 PASSENGER VEHICLE GHG STANDARDS
2 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2018-07
most likely, 13 other U.S. states and the
District of Columbia.
2. Research questions and
methodology
Canada’s pending regulatory align-
ment decision could potentially have
impacts on its domestic auto manufac-
turing sector. This market assessment
is centered around addressing the
following research questions in order
to better inform policymakers and
other stakeholders about the potential
impacts to Canada’s manufacturing
base if the country elects to maintain
the stringency requirements in its
current 2025 GHG vehicle standards.
1. What is a current snapshot of
Canada’s automobile manu-
facturing sector? Where are
the assembly plants located in
Canada? What are the brands and
models being produced, and what
are their market prospects over
the next few years?
2. For the models produced in Canada,
where are these vehicles sold in
the U.S. if we break the country
into two distinct sales geographies:
California and the thirteen Section
177 states (CA+13 states) versus
the remaining 36 states?
3. For the models produced in
Canada, what brands and models
are popular in the CA+13 states?
4. For the models produced in Canada,
is there any difference in the fuel
economy of the top-selling vehicles
in the CA+13 states as compared to
the rest of the country?
To explore these questions, we used
the following methodology for our
analysis.
1. We acquired vehicle production
data by manufacturer, brand,
and assembly plant location for
every model that is produced
in Canada. For this analysis, we
procured data from IHS Markit,
which is North America’s leading
aggregator of sales, registration,
and production data.
2. Given project resource con-
straints, we were unable to pre-
cisely track the ultimate sales
location of the actual vehicle
models that are produced in
Canada. As a simplification, we
make the following assumption:
Vehicles produced in Canada
are sold in both Canada and the
U.S. For those that are sold in
the U.S., we assume that the dis-
tribution of sales of the actual
Canadian-made vehicles is
exactly the same as the overall
distribution of sales for those
vehicle models, in terms of sales
in the CA+13 states versus the
rest of the U.S.
3. For the fuel economy analysis,
we used values from www.
fueleconomy.gov.
3. Auto production in
Canada
Ontario has seven operating car and/
or light truck assembly plants in
2018, assembling the twelve
4
vehicle
models summarized in Table 1. While
in recent years most automakers have
been reducing their Canada footprint
in favor of producing in lower-cost
Mexico, auto manufacturing remains
an important industry in Canada,
accounting for a substantial share
of the nation’s exports to its North
American Free Trade Agreement
(NAFTA) partners and beyond. All of
the twelve models are cars or car-like
trucks (CLTs or “crossovers”); Canada
assembles no true trucks.
5
Note that
five of the vehicles assembled in
Canada are also assembled in the U.S.
and/or Mexico.
Table 2 displays how many of each of
the 12 models that are partly or wholly
4 We have not included the Dodge Grand
Caravan, as FCA’s product plans call for this
model to be terminated by 2019. We have
also excluded the Ford Flex and Lincoln MKT,
as they are low-volume and, based on Ford’s
product plans, likely to terminate by 2020.
In addition, a modest number of Cadillac
XTS and Chevy Impala models are built in
Oshawa, but GM’s product plan suggests that
production there will likely terminate in 2020
and 2019, respectively.
5 As we will see, this could briefly change at
Oshawa under a temporary arrangement with
Unifor as part of the changeover for the T1xx
update of the Silverado and Sierra.
Table 1. Vehicles assembled in Canada, 2017
Vehicle model
assembled in Canada
Location of assembly
plant in Canada
Assembled only
in Canada? Vehicle type
Chrysler 300 Brampton Yes Luxury car
Dodge Challenger Brampton Yes Muscle car
Dodge Charger Brampton Yes Muscle car
Chrysler Pacifica Windsor Yes Minivan
Ford Edge Oakville Yes Crossover
Lincoln MKX Oakville Yes Crossover
Chevrolet Equinox Ingersoll No Crossover
Toyota Corolla Cambridge No Midsize car
Honda Civic Alliston No Small car
Honda CR-V Alliston No Crossover
Toyota RAV 4 Woodstock No Crossover
Lexus RX350 Cambridge Yes Crossover
AUTOMOBILE PRODUCTION IN CANADA AND IMPLICATIONS FOR CANADA’S 2025 PASSENGER VEHICLE GHG STANDARDS
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assembled in Canada
6
were sold in
2016 or registered in the U.S. during
the 12 months ending August 2017.
7
Adding the not-quite-comparable
8
second and fourth columns results
in a total of roughly 2.6 million units
of the 12 models sold in the U.S. or
Canada. Of those, about 800,000 (or
31%) were sold by the “Detroit Three”
(i.e., General Motors, Ford, and Fiat
Chrysler Automobiles) and the rest
(69%) by Toyota
9
or Honda.
Note the dierence in vehicle types
and market appeal of the vehicles
oered by the Detroit Three versus
those oered by Honda and Toyota
(including Lexus). The latter are
leaders in their segments; the RX350
(and its associated hybrid version) is
Lexus’s best-selling North American
model. While small cars are lately
losing some market share, the Toyota
Corolla and Honda Civic remain the
two best-selling cars in their segment.
Their sales prospects are bright, so
they and other vehicles on the same
platforms oer the best opportunity
for new investment in Canada. Finally,
these models in particular, and their
brands in general, enjoy their highest
market share in the CA+13 states.
The new Chevrolet Equinox is a very
popular model and, while it is not the
best-selling crossover in its class, it is
likely to continue to do well. However,
increased production at the Ingersoll
plant is less likely than it is to occur at
6 “Wholly assembled in Canada” is with respect
to sales in the North American market. Some
of the 12 are also built elsewhere in and for
non-NAFTA markets.
7 We are using the terms “sales” and
“registrations” interchangeably. Our data,
acquired from IHS Markit, cover new vehicles
registered for the first time in the 12-month
period September 2016 through August 2017.
8 The 4th column shows Canadian sales for
2016, while the 2nd column shows U.S.
registrations for a period that it eight months
more recent. This is why there is some
discrepancy in the numbers.
9 Lexus is the luxury vehicle division of Toyota.
Honda and Toyota’s Canadian facili-
ties, as Equinox is now being assem-
bled at two plants in Mexico.
The Charger and Challenger models
oered by Fiat Chrysler Automobiles
(FCA) from its Brampton plant remain
popular with consumers favoring
muscle cars, with combined sales
similar to those for Ford’s Mustang
and GM’s Chevrolet Camaro.
10
But
like most Detroit Three vehicles, with
the exception of pickup trucks, they
are not popular in the CA+13 states
(see Table 4, below). Moreover, FCA’s
Brampton vehicles are on a mature
platform, the LY, that itself is only
a modest reworking of the old LX.
FCA intends eventually to move
some or all of these vehicles to its
Giorgio Platform, which is the basis
10 See Patrick Rall, “Ford Mustang Beats
Chevrolet Camaro, Dodge Challenger to
Claim 2016 Title,” TorqueNews, January 4,
2017. https://www.torquenews.com/106/
ford-mustang-beats-chevrolet-camaro-
dodge-challenger-claim-2016-title. Sports
car aficionados tend to compare only
2-door models, but in fact a high proportion
of (four-door) Chargers are also muscle
cars. Fully one-third of those sold in 2016
had a V8 engine, the same proportion of
V8s as Mustang.
for the Alfa Romeo Giulia now being
sold. A move to Giorgio would allow
FCA to spread development costs
over up to five vehicles that could
share this design architecture. The
five include a rumored return of the
Barracuda and/or the Hornet, and
the 300 could also move to this plat-
form.
11
These plans will be updated
in 2018 when FCA rolls out its latest
long-term product plan. However,
in the past FCA has cancelled new
vehicle programs when a shortage of
capital looms, as it would do again if
the market slows significantly and/or
if it seeks to tidy up its balance sheet
for a spino or sale.
The Pacifica is new and has sold rel-
atively well, although its high sticker
price may have caused limited sales
volume. The cheaper Dodge Grand
Caravan continues to be built in
Windsor (and indeed has just been
updated to meet U.S. safety require-
ments), but the planned end of Grand
Caravan production in 2019 could
11 Alternatively, the 300 could be terminated
or moved to front wheel drive and share the
platform used by the Chrysler Pacifica and
potentially be built alongside it in Windsor.
Table 2. Registration and sales totals for the 12 vehicle models produced in Canada
Vehicle model
assembled
in Canada
Units registered
in the U.S.
(Sept 2016 – Aug. 2017)
Units assembled
in Canada and
sold in the U.S.
(2016)
Units sold in
Canada
(2016)
Chrysler 300 49,827 53,241 3,662
Dodge Challenger 66,021 64,433 3,158
Dodge Charger 90,824 95,437 3,738
Chrysler Pacifica 110,282 62,366 2,650
Ford Edge 135,802 134,588 20,517
Lincoln MKX 30,941 30,967 3,551
Chevrolet Equinox 268,806 188,164 19,197
Toyota Corolla 355,176 191,050 45,626
Honda Civic 360,514 162,231 64,551
Honda CR-V 377,248 181,079 44,789
Toyota RAV 4 390,864 277,513 49,103
Lexus RX350 100,764 104,446 8,147
TOTAL, 12 models 2,317,069 1,545,516 268,689
AUTOMOBILE PRODUCTION IN CANADA AND IMPLICATIONS FOR CANADA’S 2025 PASSENGER VEHICLE GHG STANDARDS
4 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2018-07
increase sales of the Pacifica. Still,
the Windsor plant will not be full,
and two larger crossovers could be
built at the plant on FCA’s Compact
Wide Platform (which is also the
basis for the Pacifica). These cross-
overs have been tentatively named
the Chrysler 400 and 700 and could
represent additional volume for the
Windsor plant.
The Brampton facility is in some danger
after the current Unifor contract expires
(in 2020), for several reasons:
1. Sales of its current product line
are stagnant or declining and are
focused on brands (Chrysler and
Dodge) and market segments
(large cars) that are falling out
of favor.
2. FCA is in a more precarious finan-
cial position than many of its com-
petitors, and cost-cutting and/or
a merger with another automaker
are possible, either of which could
shake up its vehicle line-up plans.
While the Brampton plant has received
some investment (most recently in its
paint shop), it is a relatively mature
facility. Moreover, its location in an
upscale part of suburban Toronto may
mean that FCA could be tempted to
close it and sell the land for quick
earnings and a positive entry on their
balance-sheet.
12
12 If FCA has the money to go forward with
the full Giorgio platform in North America, it
will need two full assembly plants for it, one
for the up-to-five car models and one for
the next-generation Jeep Grand Cherokee
and Grand Wagoneer. Ironically, its Jeerson
North plant, which build’s today’s Grand
Cherokee, could be a victim of its own
success. FCA cannot aord to lose Grand
Cherokee sales, and might therefore opt to
run the current model right up to when a
retooled plant—Brampton, Toledo, Warren,
or a new plant—is ready. This possibility is
very much on the radar of Michigan’s auto
retention/attraction professionals.
4. Where in the United
States the vehicles made
in Canada are sold
To shed light on Canada’s decision
about whether to align with the U.S.
federal standard or, instead, with the
likely CA+13 standard, the study team
commissioned sales data by geography
for the 12 models from IHS Markit. The
IHS data are summarized in Figure 1.
At the highest level, the results seem
clear: the seven Detroit Three-made
models sell less than average in the
CA+13 states, while the Toyota and
Honda models sell better. All told, the
twelve vehicle models produced in
Canada do better in CA+13, but not by
a great deal—37.8% of their sales are
in those markets. This figure is only
slightly higher than total sales in the
CA+13 states, which represent 34.8%
of vehicle sales in the U.S. However,
as Figure 2 illustrates, the popularity
of vehicles brands sold in the CA+13
states differs markedly from those
sold in the other 36 U.S. states.
As shown in the red column, 44% of total
U.S. sales of the Toyota Corolla, Honda
Civic, Honda CR-V, Toyota RAV 4, and
Lexus RX 350 are in the CA+13 states.
In contrast, the combined market share
of Honda, Toyota, and Lexus in the U.S.
is 24%. For the Detroit Three, these two
percentages are roughly reversed. GM,
Ford, and FCA have a combined market
share of 44% in the U.S., while only
25% of the seven models that these
three automakers produce in Canada
are sold in the CA+13 states.
Figure 3 compares the fuel economy
and total U.S. sales of the seven
models produced by the Detroit
Three compared to the five models
made by Toyota and Honda. As
shown, the fuel economy values
for the seven Detroit Three models
range from about 19 to 23 miles
per gallon (mpg) and have a sales-
weighted average of 21 mpg. The
37.8%
0
50,000
100,000
150,000
200,000
250,000
300,000
0%
10%
20%
30%
40%
50%
60%
Chrysler 30
0
Dodge Challenger
Dodge Charger
Chrysler Pacifica
Ford Edge
Lincoln MKX
Chevrolet Equinox
Toyota Corolla
Honda Civic
Honda CR-V
Toyota RAV4
Lexus RX350
Overall, for 12 models
Number of units assembled in
Canada and sold in the U.S.*
* Note: the CA+13 states account for 34.8% of total U.S. registrations
Percentage of U.S.
registrations in
CA+13 states
Figure 1. The 12 models produced in Canada and their share of vehicle registrations in the
CA+13 states
AUTOMOBILE PRODUCTION IN CANADA AND IMPLICATIONS FOR CANADA’S 2025 PASSENGER VEHICLE GHG STANDARDS
WORKING PAPER 2018-07 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION 5
five models from the two Japanese
manufacturers have fuel economy
vales ranging from roughly 23 to 34
mpg, with a sales-weighted average
of 29 mpg. The Toyota and Honda
models have sales-weighted average
fuel economy that is 34% higher than
the Detroit Three vehicles.
5. Summary and policy
implications
The following are the key takeaways
from this market assessment:
1. The combined vehicle sales in
Canada, California and the 13
states that have adopted California
vehicle emissions standards make
up 41% of total vehicles sold in the
U.S. and Canada.
2. Canada has seven production
plants that produce 12 vehicle
models. When looking at total
sales of these 12 vehicle models in
the U.S., the CA+13 states account
for about 38% of these vehicle
sales. This is only slightly higher
than the overall market share of
the CA+13 states, which is about
34% of total U.S. sales.
3. The five Toyota and Honda vehicle
models that are produced in Canada
are much more popular than the
seven “Detroit Three” (i.e., GM, Ford,
and FCA) models in the CA+13
states. Canada-made Toyota and
Honda vehicles are almost twice
as likely to be in sold in the CA+13
states than the vehicles made in
Canada by the Detroit Three.
4. The Toyota and Honda vehicles
manufactured in Canada have
a sales-weighted average fuel
economy (29 mpg) that is nearly
35% higher than their Detroit
Three counterparts (21 mpg).
We can make several policy-relevant
conclusions from this study. This
analysis strongly suggests that from
both an economic and environmental
perspective it would be most benefi-
cial for Canada to maintain its current
2025 GHG standards for passenger
vehicles rather than remaining aligned
with a weakened U.S. federal govern-
ment regulation. The advantages of
0%
5%
10%
15%
20%
25%
30%
35%
40%
45
%
50%
General Motors, Ford, and
Fiat Chrysler Automobiles
25%
44%
Overall
market
share in
the US
44%
24%
Overall
market
share in
the US
Honda, Toyota,
and Lexus
Percent of 12 vehicle models produced
in Canada and sold in CA+13 states
Figure 2. GM, Ford, and FCA versus Honda, Toyota, and Lexus: their combined market
shares in the CA+13 states compared to the U.S. overall
*STICKER fuel economy values taken from www.fueleconomy.gov
0
50,000
100,000
150,000
200,000
250,000
300,000
0
5
10
15
20
25
30
35
40
Chrysler 300
Dodge Challenger
Dodge Charger
Chrysler Pacifica
Ford Edge
Lincoln MKX
Chevrolet Equinox
Detroit 3’ sales-weighted average
Toyota Corolla
Honda Civic
Honda CR-V
Toyota RAV4
Lexus RX350
Japan 3’ sales-weighted average
29
21
Units sold in the U.S.
Estimated miles
per gallon*
Toyota, Honda, Lexus: 916,000
vehicles produced in Canada
and sold in the U.S.
GM, Ford, FCA: 629,000
vehicles produced in Canada
and sold in the U.S.
Figure 3. GM, Ford, and FCA versus Honda, Toyota, and Lexus: fuel economy ratings and
total U.S. sales of the 12 vehicle models produced in Canada
AUTOMOBILE PRODUCTION IN CANADA AND IMPLICATIONS FOR CANADA’S 2025 PASSENGER VEHICLE GHG STANDARDS
6 INTERNATIONAL COUNCIL ON CLEAN TRANSPORTATION WORKING PAPER 2018-07
Canada maintaining the current 2025
stringency levels include:
1. Maintaining regulatory solidarity
with California and the Section 177
states. With the imminent roll back
of the U.S. federal GHG and fuel
eciency standards, there could
be a bifurcated regulatory situation
in which there are two separate
regulations facing manufacturers:
the weakened EPA/DOT federal
regulation versus California’s regu-
lation, which is likely to remain at
current stringency levels. Given the
auto industry’s strong preference
to sell the same vehicle models
across Canada and the U.S., this
Canada-CA+13 regulatory alliance
could motivate automakers to
simply sell the higher efficiency
models required in Canada and
the CA+13 states in the remaining
36 U.S. states. Thus, the current
2025 regulation would be the de
facto standards for the entire U.S.-
Canadian market.
2. Retaining support for the domestic
manufacturing base by uphold-
ing vehicle GHG standards that
promote the types of higher e-
ciency vehicles that are more
prevalent in the Canadian auto
industry.
3. Putting Canada in a stronger
position to meet its 2030 climate
commitments, as vehicle GHG
standards are a cornerstone of the
strategy to reduce GHG emissions
from the transport sector.
4. Keeping Canada competitive in
global markets, since other major
markets such as China and Europe
are implementing aggressive GHG
regulations and zero emission
vehicle policies, which are accel-
erating the prevalence of high e-
ciency and electric drive vehicles.
