The Conference Board of Canada predicts that Canada's auto industry rebounded and the profitability is in sight for the year of 2010. In fact the car industry may keep increasing and getting bigger untill 2014.
"The Canadian automobile industry seems to have taken a decisive turn in the second half of 2009 and we expect a return to profitability in 2010," reads the study published Tuesday. Thus, the auto sector should show a profit of 263 million in 2010 compared to losses of 2.3 billion before taxes in 2009, according to the study.
Reducing costs is necessary
However, the author of the study, Sabrina Browarski, adds that production will remain below historical levels. "Manufacturers must take concerted action and make constant efforts to streamline their product, control costs and innovate to maintain their profitability," says she.
Cost reductions, including an agreement between the three major manufacturers and the unions is important to reach and maintain profitability. The Canadian car industry received 13 billion dollars in loans from the Canadian and Ontario governments.
The Conference Board expects sales of 11.6 million cars in the United States in 2010. These figures should help boost production, it had dropped to 26% capacity last January, the study says. This is far below the historical high levels, but enough to reach profitability of the Canadian car industry.
By Armen Hareyan
With Radio-Canada.ca and Canadian Press
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