Industry and Technology Committee on Oct. 27th, 2025

[The Chair, Liberal, Ben Carr]

Good morning, everybody. I hope you had a nice weekend.

We are here today for the 10th meeting of the committee on industry and technology.

As per the deliberations of the committee last week, this is the first of three meetings on the state of the auto sector.

The witnesses we have with us today are all in the room. From the Canadian Automobile Dealers Association, we have Huw Williams, who is the national spokesperson, alongside Charles Bernard, chief economist. From the Global Automakers of Canada, we have David Adams, the president and chief executive officer. From the Canadian Vehicle Manufacturers' Association, we have Brian Kingston, the president and chief executive officer.

Witnesses, just as a quick reminder, if you're using your headset—which, if you're not fluent in French, you will need when members are speaking in French—and if you have it plugged in and it's not on your ear, please make sure that you place it on the sticker in front of you. This is to protect the health and well-being of our interpreters.

The way that today's proceedings will work is the same as in a regular committee meeting. We will afford Mr. Williams, Mr. Kingston and Mr. Adams up to five minutes each for their introductory remarks, followed by a line of questioning related to the number of seats around the table for all recognized political parties.

Colleagues, I will probably suspend about midway through in order to provide a bit of a break for folks. We are not turning over panels. The individuals with us today are the four who will be with us for the duration of the two hours.

With that, Mr. Williams, I'll turn it over to you for your introductory remarks for up of five minutes. The floor is yours.

[Huw Williams, National Spokesperson, Canadian Automobile Dealers Association]

Thank you, Mr. Chair. I so appreciate the invitation to be here.

Good morning. Bonjour.

I'm here with Charles Bernard. Charles is the chief economist for our association and is very proud to hold that role. We brought him in from Montreal today because we're going to have two hours to unpack the economy, and he'll be an excellent resource for you as we go through that.

As most of you know, I feel I'm in a committee room full of lots of friends, because you know the auto industry, and I've met with most of you in one capacity or another to talk about the car business.

The Canadian Automobile Dealers Association has 3,400 franchised car dealer members across the country that directly employ 178,000 Canadians. We are a major employer in this country. We pay approximately $6 billion in federal, provincial and municipal taxes and contribute $28 billion to Canada's GDP.

This year alone, our members will sell some 1.9 million new vehicles to Canadian families and businesses, and they will sell 1.3 million used vehicles and write 31 million service orders. Let that sink in for one second. With 31 million service orders, we literally drive the economy of this country. We do the service and repair for emergency services and police services. Even the military depends on our members. We were named an essential service during COVID to keep the country rolling because doctors, nurses and hospital workers couldn't get to work without our members.

As you know, the auto industry is in one of the most turbulent and complex periods of time we've ever had in our history, and that's saying a lot. We've had a lot of turbulence in our industry over the years. The Prime Minister has called it a trade rupture, but on the showroom floors, we call it an affordability crisis, as we're facing mounting costs that seem to be multiplying on all kinds of different levels.

The trading framework that is the foundation of our business is becoming increasingly chaotic because of the U.S. administration. During this president's first administration, we ran a very high-profile campaign in Canada and the U.S. tied in with our American partners, the National Automobile Dealers Association, to deliver the message on both sides of the border that tariffs are bad for the economies of both countries, bad for the auto industry in both countries and bad for dealers, and, most importantly, that they are terrible for consumers in Canada and the U.S.

This past July, we led a trade mission down to Washington, D.C.—thank you to the embassy and the different trade offices that accommodated us—to meet with over 30 congressional leaders, senior senators plugged into the Trump administration and the auto sector down there and senior members of the administration. Again, we went to deliver the message that Canadian car dealers and our customers are, in fact, the largest consumers of U.S. exported vehicles in the world. In many ways, they're shooting themselves in the foot by putting tariffs on their largest customer.

If you look at the three countries—Germany, Mexico and China—that are the next largest export markets for the U.S. auto industry, we're larger than those three combined. Our message is resonating that this is not the right thing to do in the U.S.

We can tell you, because we're on the front lines of the affordability challenge, that our members are concerned about affordability and their customers are concerned about affordability. A recent study by Deloitte showed that 67% of Canadians expect to pay $500 per month for their vehicle. However, the fact is the average payment for a lease in this country is $770 and the average payment for a loan is $880. It's substantially higher than what customers' expectations are. This is only going to get worse as all of these trade issues and tariffs on steel aluminum, copper, other inputs and autos work their way through the system.

Our message today is we have to get our own market in place to be effective. We have to make sure this is a competitive place to invest and a competitive place to sell vehicles.

If we talk about the federal EV mandate, that's one of the major impediments our dealers are worried about. The federal government's most recent decision to pause those mandates and the 2026 targets is a good first step. We're appreciative of that. Now is the time to take it the next step further and eliminate those mandates. Importantly, we already have a backstop of greenhouse gas emissions targets that are set out by Environment and Climate Change Canada regulations that achieve the same thing but are technologically neutral.

I would also say, if we were getting rid of inefficient taxes, the so-called luxury tax should be eliminated in this country. As I mentioned, in terms of affordability, the average vehicle in this country is now north of $60,000, and it's not uncommon for workers, electricians and people in the construction space to buy work trucks that are in excess of $100,000. These are not luxury vehicles.

We already have a perfect tax system, the GST, where, as you pay more for any good, you pay more tax. That's the way it should be.

I can tell you, with CRA in disarray—I'm not the one saying it; it's the Auditor General and it's the Canadian public—now is the time to clean house and get rid of that inefficient tax.

In fact, we had a dealer who had not sold a vehicle over $100,000. He had an auditor come to his office and he told him that he hadn't sold that kind of car yet, so it should be a short order. He told the auditor he could give them a list of their sales and that they're all south of $100,000. It took them three days to work through the process to verify that. It's not an efficient tax.

I would also say that in terms of the regulatory framework, our CADA president put out a framework that talked about the need to be able to harmonize with other jurisdictions with which we have free trade agreements in order to get niche products into the country. Where we have a framework with joint safety and emissions, we should accept vehicles from other jurisdictions where we have free trade agreements. Notably that would include Europe, South Korea and Japan.

Thank you for your time.

[The Chair, Liberal, Ben Carr]

Thank you very much, Mr. Williams.

Mr. Kingston, welcome. You have five minutes.

[Brian Kingston, President & Chief Executive Officer, Canadian Vehicle Manufacturers' Association]

Mr. Chair and honourable members, thank you for the invitation to appear here today.

The Canadian Vehicle Manufacturers' Association, or CVMA, is the industry association representing Canada's leading manufacturers of light- and heavy-duty motor vehicles. Our membership includes Ford, General Motors and Stellantis.

CVMA members have been operating in Canada for over 100 years. They're responsible for most of the auto production in this country, having built over 100 million vehicles since 1945. Those are the earliest records we have, but of course production goes back further than that.

They're also the largest employers in the auto manufacturing sector, supporting over 20,000 direct jobs, the majority of which are unionized. Simply put, the auto industry and its supply chain would not exist today if it were not for the commitments of Ford, General Motors and Stellantis in Canada.

Now due to U.S. trade actions, the automotive industry is under unprecedented stress. Tariffs of 25% applied on finished vehicles built in Canada fundamentally challenge the existence and future of the industry. Over 90% of production is destined for the U.S. There is no industry without U.S. access. Diversification is not an option as markets in Europe and Asia are better served by assembly plants in those regions.

The future of the industry and the hundreds of thousands of jobs it supports depend on securing our trade relationship with the United States. Because of that, our top priority is to remove the U.S. section 232 tariffs. These tariffs and Canada's retaliatory measures are doing enormous damage to the integrated supply chain. In the first 10 months of this year, automakers will pay $10.6 billion U.S. in tariffs on the vehicles they import from Canada and Mexico. That doesn't include, of course, the additional tariffs on steel and aluminum. According to the Center for Automotive Research, U.S. tariffs alone will cost the U.S. industry $188 billion U.S. over the next three years.

We're now in a situation where it is more cost-effective to manufacture a vehicle in Japan or Germany and export it to the U.S., as opposed to manufacturing in North America for North America. It doesn't make sense.

Once the U.S. tariffs are removed, the renewal of the CUSMA needs to be a priority for the federal government. The CUSMA is the foundation of the integrated North American automotive industry. It provides certainty. It reinforces the long-established integration of the supply chain necessary for our competitiveness and it ultimately facilitates regulatory alignment of vehicle technical regulations. The uncertainty that continues to hang over the industry, and the broader Canadian economy, around the future of Canada's relationship with the U.S. is making it nearly impossible for companies to commit to capital in Canada.

Clearly, securing these outcomes that I've just outlined is not guaranteed and not all within our control. As the Prime Minister has said recently, “In a rapidly changing and uncertain world, Canada's new government is focused on what we can control.” We agree.

There are things in Canada's control that can be implemented today to strengthen the industry and bolster our competitiveness as a manufacturing powerhouse.

Priority one is the elimination of the federal EV mandate known as the electric vehicle availability standard. This regulation is prioritizing EV sales over the development of our North American EV supply chain. It is a direct challenge to our competitiveness as an auto manufacturing jurisdiction because it is levying punitive costs on companies that do not achieve these arbitrary sales targets.

Under this regulation, the vehicles manufactured here in Canada today are being phased out by the government. This is an inexplicable situation.

Compounding that, of course, are federal legal threats against companies and the imposition on auto companies that import from the United States. Auto companies with no Canadian footprint are now better positioned than those that have been building here for over a century as they do not face any tariffs. The result is there's little incentive remaining to build vehicles in Canada today.

We can change this, but we have to have a collaborative effort. With government working with industry and labour to address these challenges, there is a future for this sector.

Thank you for the opportunity. I look forward to all the questions.

[The Chair, Liberal, Ben Carr]

Thank you very much, Mr. Kingston.

Mr. Adams, you have up to five minutes.

[David Adams, President & Chief Executive Officer, Global Automakers of Canada]

Thank you, Mr. Chair and members of the committee, for the opportunity to speak to you today on behalf of the 16 members of the Global Automakers of Canada.

The Global Automakers of Canada is a national trade association representing the Canadian interests of 16 of the world's most significant automakers.

Our members are collectively responsible for more than 62% of vehicle sales in Canada, and our two manufacturing members, Toyota and Honda, are Canada's largest and second-largest vehicle producers, representing, through to the end of September this year, 75.5% of Canadian light-duty vehicle production.

Additionally, GAC member Volkswagen and its partner PowerCo remain in the process of building up the $7-billion battery factory in St. Thomas, Ontario, which is slated to employ up to 3,000 people directly. Importantly, the members directly and indirectly employ more than 216,000 people, contribute almost $25 billion to Canada's GDP and generate more than $10.5 billion in government revenues.

Stellantis is not one of my member companies. Even if it were, I would still have no line of sight into the agreements between the company and the federal government because that's a confidential agreement. What I can say about Stellantis is that, while at American Motors (Canada), my father worked with officials from the federal government and Renault to secure the building of the Brampton plant in question now. While few remember American Motors, that facility became an important piece of the Chrysler-Stellantis Canadian footprint, revitalizing the automotive industry in Brampton.

That is to suggest that, while the committee is looking at government commitments made to Stellantis, I believe the focus of this committee's work needs to be more broadly on developing a more resilient, holistic and long-term strategy to keep the automotive sector, from parts and vehicle manufacturing all the way to sales and distribution, strong and healthy, including navigating the immediate headwinds that Mr. Kingston and Mr. Williams have highlighted. As part of that strategy and in order to build one of the strongest and most competitive economies in the G7, we will need to ensure that any carrots or sticks related to the attraction and support of automotive investment are competitive with those of other nations.

The auto sector represents Canada's second-largest export sector by value, and it needs more than shorter-term and ad hoc programs to attract investment and support programs competitive with other nations, which is important. We also need to ensure that these programs do not get misrepresented or politicized. For instance, production-linked tax credits only exist if there is production and tax revenue to begin with. All parties should respect these provisions. To do otherwise leads to misperception across Canadian society and compromises the integrity of these programs that are necessary to ensure that such investments do not go elsewhere.

A poll undertaken last week by Pollara suggests that concern for the automotive industry is widespread, with 74% of Canadians and 79% of Ontarians believing that if the automotive sector collapsed, it would have a “devastating” impact on the Canadian economy. We agree.

While there is rightful concern about the future of the automotive industry in Canada, let's not lose sight of the potential that exists in this sector if we work quickly to establish something like the Royal Commission on the Automotive Industry undertaken by Vincent Bladen in 1961. With that important work undertaken, the framework for the 1965 Auto Pact with the United States was created, which established managed, tariff-free sectoral free trade in the automotive industry between the two countries.

Our auto sector is very different now than it was in the 1960s. It now includes high-value areas, such as critical and rare earth minerals required for batteries, and semiconductors, cybersecurity and software related to connectivity and automation. These areas represent opportunities for Canadian advantage in an integrated North American automotive industry, and we need to develop a new model that can ensure that we are a partner the U.S. truly cannot live without.

Second, if we cannot be assured of access to the United States as part of that integrated North American industry, I think that Canada must expand its horizons with the G7 countries that we already have free trade agreements with and beyond. Previous governments of different political stripes have done a good job of setting up Canada with multiple FTAs that need to be considered as part of a new auto strategy.

While Canada does have real strengths in each of the areas noted above, without a comprehensive strategy, these strengths may just remain opportunities on paper that are unable to be realized.

Thank you for the opportunity to be here today. I look forward to your questions.

[The Chair, Liberal, Ben Carr]

Thank you very much, Mr. Adams.

Colleagues, we will get right into our line of questioning.

Madam Dancho, the floor is yours for six minutes.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you, Mr. Chair.

Thank you to the witnesses for being here.

As you know, we're looking into something that has gripped the nation. In Canada, we have tens of thousands of auto sector jobs on the line, so I appreciate your presence and expertise very much.

My first questions are for Mr. Kingston.

You're the president and CEO of the Canadian Vehicle Manufacturers' Association, representing GM, Stellantis and Ford in Canada. Is that correct?

[Brian Kingston]

That's correct.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

I'm sure you've been following the news. Stellantis recently announced that it's moving production from the Brampton facility to the U.S., along with massive U.S. investments. At the same time, as you know, Stellantis has received hundreds of millions of dollars in funding agreements, and some of that money has already flowed to various plants for retooling, in addition to the up to $15-billion contract with the provincial and federal governments for EV battery production here. You're aware of that.

From what we're understanding, if Stellantis is moving production from the Brampton facility, putting up to 3,000 jobs at risk, it would seem that there was no Canada-wide jobs guarantee in those contracts. Can you comment on that?

[Brian Kingston]

First of all, contracts between the federal government and Stellantis are confidential, as are all contracts negotiated between government and private sector companies, so I cannot comment specifically on any of the covenants in those agreements. However, of the commitments that have been made by Stellantis, the overwhelming majority have already been executed, so, of the $8 billion committed, about $7 billion has already been executed. You have a new electric vehicle being built in Windsor. You have the NextStar battery plant—that's 1,000 jobs—which is now operational. The announcement with respect to Brampton, there are plans for Brampton. It's not a plant closure.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

Thank you for confirming that. There are plans for Brampton that we'll be waiting for.

Our concern as well is from your other comments about the difficulties the Canadian auto sector is facing. In fact, you said, “Canada's competitiveness as an auto manufacturing jurisdiction is rapidly eroding”. Certainly, your comments today would signify that there are concerning events on the horizon. We're not through this yet in Canada. It seems that all your comments, in fact, would confirm that.

What we're concerned about is that this may not be the first of the Stellantis or other companies' job layoffs. We're deeply concerned, and we'll be paying close attention.

However, I want to focus a bit more on that. The job losses to date that we're aware of are: at the GM Oshawa plant, about 700 workers; I believe, at GM in Ingersoll, which was announced recently, about 500 workers lost and 1,200 more uncertain; at Stellantis, 3,000 are uncertain.

The tariffs from the U.S. remain, and now you mentioned the countermeasures that are being applied. At the federal level, they're talking a lot about how, for steel and aluminum, we hope to see a deal. That's great, but there doesn't seem to be as much of a primary focus by the federal government on getting an auto sector deal.

If all things remain the same and we don't get an auto sector deal in the coming months, can you give the committee some insight into where you think the auto sector, and all the jobs that entails, will be in a couple of years?

[Brian Kingston]

If we don't get an agreement, a removal of tariffs and, importantly, a renewal of CUSMA—because, while the 232 tariffs have an immediate impact now, if you're a company that is thinking about investing in Canada and you have no certainty regarding the future relationship with the United States, which is what is codified in our CUSMA agreement—it is virtually impossible to make long-term commitments in Canada. Therefore, we need a resolution on both items, and we need that to happen rapidly, or it will be very difficult for any new investment in this country and to maintain existing investments.

Frankly, that's not just an automotive story. That applies to virtually every sector of the Canadian economy. We are overwhelmingly dependent on the United States. That will never change, so we have to figure this out and we have to do it quickly.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

I appreciate that. You mentioned it will be difficult to maintain new investments. Again, there are concerning events on the horizon for future jobs under your purview and under the purview of others here.

If we can't control what's going on with the U.S., and if we're not going to get an auto deal, what can we control in Canada to make us more competitive? Surely there's something locally that's within our sole purview to make Canada a more competitive environment for you to stay here and to expand here in the future. Can you comment on that?

[Brian Kingston]

Absolutely, and we've laid out a number of priorities for the government to make Canada more competitive.

If you look back in history, when you have a protectionist U.S., fighting protectionism with protectionism doesn't work. We are the smaller partner, and we have to work in a new reality with a more protectionist United States. Think about U.S. tariffs as equivalent to one of the largest corporate tax hikes in American history. That's what it ultimately does. Costs are borne by Americans and American companies.

What do you do in response to that as Canada? You can retaliate. You won't win that battle. We've learned that lesson. Your second-best option is to make Canada ultracompetitive.

We should be doing everything possible right now to position this country as the best destination in the world for new auto investment and new investment writ large in every sector of the Canadian economy. Get rid of redundant, damaging regulations like the EV mandate. Address interprovincial trade barriers that make it extremely costly and challenging for large companies to operate across this country. Build out a world-class pitch for new automotive investment. We can do that right now, and we can make Canada more cost-competitive than the United States for auto manufacturing.

That's what I would propose we do.

[Raquel Dancho, Conservative, Kildonan—St. Paul, MB]

I think I only have five seconds left.

Thank you very much for your input. I appreciate it.

[The Chair, Liberal, Ben Carr]

Thanks, Madam Dancho.

Madam O'Rourke, you have six minutes.

[Dominique O'Rourke, Liberal, Guelph, ON]

Thank you very much, Chair.

Mr. Kingston, we're all aware of the strength, the productivity and importance of Canada's auto sector. As you've said, it's more than 100,000 direct jobs and 500,000 indirect jobs. The city of Guelph is home to Linamar, Denso, Magna, and that alone is more than 12,000 jobs. It makes us one of Canada's most vulnerable cities to U.S. tariffs. I'm acutely aware of the challenges in the auto sector and its importance.

You just mentioned that we should build out a world-class pitch. In the last several years, we've had extraordinary investments by Volkswagen and significant investments by Stellantis. We know what the strength is of our sector. We know how qualified our auto workers are, how effective our plants are, because that's what's attracting that foreign direct investment and new lines to Canadian factories.

I'm wondering if you could help us understand a bit of the history of what was working so well pre-January 2025, and to what you would squarely attribute the industries' current challenges.

[Brian Kingston]

It's a great question.

I think sometimes, given all the uncertainty in the sector right now, we forget about the success of the past five years, $40 billion-plus in new investment into the Canadian automotive industry. A large reason for that was former president Biden introduced the Inflation Reduction Act, which had measures that were explicitly aimed at taking components of the automotive supply chain from Canada and from other countries and putting them into the United States. The federal government reacted aggressively and quickly to put forward matching programs to ensure that we maintained our footprint, and we saw a huge reinvestment in the sector, historically large. That plan was working. It was linked, of course, to our critical mineral production and supply chain. What changed is that we now have a U.S. administration that is doubling down on some of those protectionist measures and is intent on securing more investment in the United States.

[Dominique O'Rourke, Liberal, Guelph, ON]

Mr. Adams or Mr. Williams, would you care to expand on that description? What remains the real strength of this sector? Our auto workers are going to work every day and assembling world-class vehicles and making world-class parts. What has really led us to today?

[Huw Williams]

I'll just make one comment to set you up, David, if I could.

One of the things I flagged for committee members is this organization named CAPC, which is the Canadian Automotive Partnership Council. It is an industry partnership among the federal government, the Ontario government and the Quebec government, which, for 25 years, has focused on getting investment into the country. All the CEOs of all the Canadian-made manufacturers sit as members of that. The parts makers and the car dealers are there. We've had a long history of supporting investment here in Canada on the dealer side of the equation. That was started as, again, a bipartisan...by the late Jim Flaherty, when he was minister in Ontario, with Allan Rock at the time.

I think that's been a successful model, but we really need to have that CAPC on steroids, if you will. It has to do more, and it has to do it faster when we're under fire from the U.S. administration.

David, I'll pass it over to you.

[David Adams]

I would add to what was mentioned in terms of CAPC. It is a great entity, but I think the reality is it has vested-interest companies around the table. What I was suggesting in my comments was having some outside experts take a good, hard look at the automotive industry as quickly as we can and set up the plan that Mr. Kingston referred to in terms of trying to figure out how we can market that moving forward.

When you ask what else has worked, the theory at both levels of government, in Ontario and federally, was to work at securing the automotive manufacturing footprint, which is key. Everything else derives from having that footprint. We saw that in terms of some of the announcements to transition these facilities to produce EVs, for instance. Then the next tier of that was the battery facilities, with the assumption that everything else upstream would come along, but that hasn't come along. That's where we need a lot of focus and attention to ensure, as I mentioned in my remarks, that this critical mineral strategy develops these critical minerals that aren't only important for the automotive industry, but also critically important to the United States for their defence industry and those types of things. That represents a real opportunity for us moving forward.

[Dominique O'Rourke, Liberal, Guelph, ON]

Mr. Adams, to follow up on that, given the importance of the battery sector and given Canada's role of a leadership position in terms of starting battery production domestically and having that value chain, it sounds to me like this was a really important investment in Canada that remains useful in terms of dual-use potential.

Would you agree with that?

[David Adams]

Yes, I would. I can only speak for myself, but I think all of us would probably agree that the future of the automotive industry is electrification. I think where the challenge comes is in how quickly we're going to be able to get there and what tools are being utilized to move us there. At the end of the day, the one deciding factor in all of this is the consumer.

The consumer has to be willing to purchase the vehicles that are being made at our factories. I don't think anybody ever expected that this transition was going to be easy with a simple adoption curve rising year after year for EV sales, for instance. We always knew that it was going to be lumpy. I think what we're facing right now has been exacerbated by other challenges going on in the United States through their own environmental policies that they're adjusting as well.

[Dominique O'Rourke, Liberal, Guelph, ON]

Am I out of time? I thought I had a bit more.