Industry and Technology Committee on Oct. 27th, 2025

[Huw Williams]

Between you and the member from Vaughan, you probably have the most car dealers in your ridings than any other jurisdictions in Canada, with the Richmond Auto Mall and others, so I appreciate the question.

Our dealers in British Columbia are selling a ton of EVs—they're very popular products in Vancouver—but even the B.C. government won't meet their mandates. Also, having three mandates—one in Quebec, one in B.C. and one nationally—is a nightmare from a compliance point of view.

We have met with the minister and the provincial government out there. They have a very interesting dynamic. They would actually have to pass legislation to get rid of it, but they can make adjustments through regulations. What they've told us is they are waiting for a signal from the federal government that the federal government is going to move on this.

What we want to see from all three levels of government and not just the federal government is to plant the flag on EV mandates. They have driven the markets, so you have a hundred choices out there. It's no longer the case that a consumer cannot find an EV. Work on charging infrastructure. Make sure the consumers can charge the vehicles and have a good, positive experience, and then let that drive the market. It will drive the market. You're seeing that out in B.C. It's a very popular program.

[Parm Bains, Liberal, Richmond East—Steveston, BC]

Thank you.

I'm going to cede the rest of my time to my colleague, Ms. Acan.

[Sima Acan, Liberal, Oakville West, ON]

Thank you very much, Mr. Bains.

Mr. Adams, in my previous professional life, I had the opportunity to visit several auto manufacturers, both in the U.S. and in Canada. Over the summer, my colleagues and I visited plants in Canada as a part of our efforts to better understand the evolving needs of the industry.

In one of the discussions with the leadership of a Canadian auto manufacturing company, I learned that their dealership in South America recently shifted purchasing from a United States plant to an Ontario facility, largely due to the impact of the tariffs and the counter-tariffs.

Would you say this reflects a broader opportunity for Canadian auto workers and manufacturers where changing global trade dynamics could strengthen Canada's position as a competitive and reliable production hub?

[David Adams]

Yes, if I understand what you're saying correctly.

Now, obviously Canadian manufacturing—it doesn't really matter which manufacturer—is predicated on access to the U.S. market. Ninety per cent of our vehicles go there. If we don't have access to the U.S. market, then every company I'm sure is doing their due diligence to figure out where else they can potentially have a market for vehicles.

I know for one of my member companies that's exactly what they have been doing. They've been finding some other countries where some of their Canadian production can go. Will it replace the U.S.? No, the volumes simply aren't there, but it's an option to take more of that volume that comes out of the Canadian facility.

[Sima Acan, Liberal, Oakville West, ON]

Canada's industrial strategy has focused not only on final vehicle assembly, but also on strengthening the supply chain that supports it. While we have a robust tier one ecosystem, there's also a growing need to expand domestic capabilities for tier two and tier three in manufacturing, particularly to support advanced vehicle production and emerging technologies like EV and battery systems.

From the perspective of international and imported automakers, which supplier capabilities do you see as most critical to develop in Canada to ensure long-term competitiveness in the North American auto sector?

[David Adams]

I think some of the ones you've mentioned are critical as well in terms of looking at, as I mentioned in my remarks, building out the EV supply chain, opening those mines and developing and processing—not shipping away—those critical minerals here, not only for the automotive industry, but for other industries as well.

We have a unique situation in Ontario where we have a globally recognized IT sector combined with an automotive sector, so the capabilities to be world leaders in connectivity, automated vehicles, exist—and I would add cybersecurity as well. Those are areas where we could have a competitive advantage.

[Sima Acan, Liberal, Oakville West, ON]

Mr. Kingston.

[Brian Kingston]

I'd just add to that. Sometimes we do spend a lot of time focusing on final assembly, for good reason, because of all the direct and spinoff jobs.

There's a lot of activity that takes place in Ontario. GM has the technical centre in Markham. Engineering talent is real and highly competitive here in Canada and hard to replicate in parts of the United States. There's Stellantis in Windsor with their ARDC research facility.

There are areas in the autonomous connected vehicle space, safety, where activity takes place in Canada, because we have a competitive advantage linked to highly skilled labour.

[The Chair, Liberal, Ben Carr]

Thanks very much.

Mr. Guglielmin, you have five minutes.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

We've been talking a lot about the very serious impact of tariffs, and to me it has always been the catalyst in the automotive and manufacturing industry.

I come from the steel service industry. I worked there for over 20 years. What I've been seeing over the last 10 to 15 years or so has been a lot of job flight and capital flight out of the manufacturing industry, out of the auto industry, into places like Monterrey, Mexico, and into the broader United States.

For instance, over the 10-year period between 2014 and 2024, our vehicle production in Canada went down by about a million vehicles per year. We have very costly policies still in place, like the emissions cap for example, and the fact that it takes 18 years to approve a mine.

We were talking about the importance and the need for critical mineral development in this country so we can facilitate production of EV batteries and things where China has a monopoly on a lot of this right now.

Mr. Kingston, I'll direct this to you.

I'm wondering how significant policy misalignment is with the U.S. We've been talking about EV mandates, for example, but what about more broadly with respect to regulations and taxation and some of these other key factors that are impeding our opportunity to increase our growth in our sector? How significant is that in influencing where automakers are making the choice to invest capital dollars?

[Brian Kingston]

It's fundamental. That is the reason the industry has grown since the Auto Pact and since the 1960s.

There has been a recognition by successive governments that you have to align your policy framework to the United States because 90% of what we're exporting is going into the U.S. market. There's no such thing as creating a stand-alone Canadian automotive industry. That wouldn't make sense. You wouldn't be able to achieve economies of scale. Regulatory alignment is key. It's really fundamental to this sector.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

I remember one of the first stories I heard when I was new in my industry. It was a major parts manufacturing company. The person was asked why they're not doing any more expansion in Canada. The answer was that when you go to other jurisdictions around the world, they seem to roll out the red carpet. Here, we roll out the red tape, whether it's through regulation, strangling through our tax framework or just overall lack of competitiveness.

Mr. WIlliams, I have a question for you.

The U.S. has moved away from aggressive EV sales mandates. Do you think Canada is putting itself at risk for a very competitive disadvantage by continuing down this path?

[Huw Williams]

I would absolutely say the EV mandate makes us less competitive and not just domestically. It makes us a less attractive market for investment. As I believe Mr. Kingston and Mr. Adams have said, we need to have a competitive auto space that matches the regulatory framework of the U.S.. They're just too big to not be aligned.

That doesn't mean we have to pull back on greenhouse gas emissions. The industry can get there with a variety of technologies. Just to let members know, over the past 20 years, the greenhouse gas emissions from the passenger vehicle market have remained steady. They haven't grown. That's despite a massive increase in population. That's because technology is at the forefront of fuel efficiency with ICE vehicles and some of it for electric vehicles.

Go ahead, Charles.

[Charles Bernard]

I think it's an important question.

Not only are we at risk of creating isolation or disruption between the U.S. and Canada, but as we mentioned with the provincial governments having either the same or more strict mandates provincially, we're at risk of creating layers of different regulations for a market that's around 40 million. That's a lot of layers of complexity for manufacturers. That will have a tremendous negative effect on consumers.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

I will say that while the tariffs certainly are the catalyst, there have been underlying regulatory and policy issues that have directly led to our lack of competitiveness overall in the manufacturing space. These are some of the things we hope we can address and we can get this government to address because a lot of these tweaks can be made to set the environmental conditions for business investment to be attracted.

At the end of the day, we're not just talking about abstract numbers. We're talking about people, families and jobs. We're essentially talking about our business and economic culture.

I'm out of time, so there is no further question.

Thank you, guys, for your testimony.

[The Chair, Liberal, Ben Carr]

Thank you, Mr. Guglielmin.

Madam O'Rourke, you have five minutes.

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

Thank you, Chair.

I think it's fascinating that just last week the representatives of Linamar talked to this committee about productivity. They told us that every year they have to cut their prices by 2% because they are so efficient. Our auto manufacturers and our parts manufacturers are extremely productive and efficient, and our workers are the best in the world.

I have seen, locally, expansion of Linamar and Denso. We need to be looking at a broader lens of the success of the past several years and how we really focus on the real problem here, which is the American tariffs, and how we can create more certainty in Canada. I believe our Prime Minister is doing that through national projects, generational investments, including the exploration and extraction of critical minerals, and training and expanding markets.

To be clear, Minister Joly has stood up in the House of Commons and has talked about a focus on steel, aluminum and energy as well as auto and softwood lumber. We may not be able to boil the ocean, so what we have is a strategy.

My question is for the panellists.

I would really appreciate your perspective. Is any deal going to be good, or do we want a good deal? There are countries in the world that have negotiated a deal and are now regretting it. Is there any value in waiting until we hear what the American Supreme Court says in terms of tariffs, so we can get back on a decent playing field and really negotiate the best deal for Canada?

[David Adams]

What I would say is that the best deal for Canada is a situation where we adhere to the rules that were negotiated under the CUSMA-USMCA. There were stringent requirements around that agreement when it was negotiated that upped the North American content requirements in vehicles, labour value content in vehicles and a myriad of different requirements that weren't easy for any automaker to make. We're only six years into that agreement and we're still making the adjustment.

If those conditions are adhered to, that should be the basis on which we continue to have zero tariffs on automobiles going back and forth across the border, and that's where we need to get to. I think some people are saying that's wishful thinking. Well, maybe that's one of the reasons that the negotiations are taking so long, because that's the ultimate goal here.

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

I would ask a follow-up question.

We've talked about the importance of stronger provisions in employment insurance to support our workers, training both for trades and also mid-career transitions, and investments in the sector and supports. You've mentioned a number of them. How important do you think it is to pass the federal budget on November 4? How damaging would it be if we were to fall into an election cycle and then further delay these negotiations?

[Huw Williams]

Do you have any easy questions?

I'll zoom back just a little bit. We definitely need a good deal with the U.S., and we recognize that's a difficult proposition. As I said before, our voices are trying to deliver that message in the U.S. in as strong a way as possible because, really, it's going to be U.S. dealers and U.S. customers talking to their members of Congress to get that done. It's a tough environment that way.

I think that certainty at this period in time while we're negotiating is in everyone's interest.

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

This is my last question, and it's an easy one for you, Mr. Williams.

We know that interest rates are coming down. The Bank of Canada was one of the first in the world to cut its interest rates. We know that the rate of inflation is slowing. Has that been helpful at all for your dealers? How does that translate into your financing agreements?

[Huw Williams]

I'll let our economist answer that. That's why he's here.

[Charles Bernard]

I appreciate the easy question, even though I don't find it necessarily easy.

What I would say is yes, I think we're in a better environment for the dealers. In terms of their operations and the costs of borrowing or interest rates, it has had a positive effect. At every conference I went to with dealers, that was the number they were looking at in terms of their operations.

In terms of consumers, even though the interest rate might have alleviated the situation in a way, as I mentioned earlier, the monthly payments, whether they're for leases or loans, are still going up because of the inflationary pressures that are created by, obviously, the U.S.-Canada trade relationship, which is extremely problematic, but also policies at home that limit the ability of our auto sector to be competitive, which has a direct reflection on the price.

In terms of operations for the dealers, it's a yes, and it's a positive, welcome change, and hopefully the economy stays in a trend that allows that environment to be maintained. As for buying cars or leasing them, customers are still facing an environment that's extremely difficult in terms of pricing, and a lot of that is attributed to the issues we've mentioned recently.

[The Chair, Liberal, Ben Carr]

Mr. Ste‑Marie, you have the floor for two and a half minutes.

[Gabriel Ste-Marie, Bloc, Joliette—Manawan, QC]

Thank you, Mr. Chair.

Mr. Kingston and Mr. Adams, one aspect of your presentations stunned me.

If I understood correctly, you said that under the current tariff system, it would be more economical for a manufacturer to build a vehicle in Germany or Japan and sell it in the United States than to produce it in North America.

Can you explain that to us and illustrate it with examples?