Despite a history of failed ventures, the idea of launching a Canadian-owned automotive company is gaining renewed, albeit cautious, attention according to a recent analysis. The report, titled In Shifting Gears: The Potential for a Canadian Car Company, suggests that while formidable barriers exist, current geopolitical and market conditions make the concept worth examining.
Unprecedented Times Prompt Unprecedented Ideas
The primary catalyst for this discussion is the ongoing trade uncertainty with the United States. U.S. President Donald Trump's repeated threats to cut off duty-free access for Canadian-built vehicles pose an existential risk to the sector's main export market. This political volatility has forced policymakers and industry leaders to consider alternative visions for Canada's economic future.
"It's probably something that won't happen," admitted Brendan Sweeney, managing director of the Trillium Network at Western University and a co-author of the report. "But we also didn't think the Americans would send troops in to kidnap the Venezuelan president. These are unprecedented times, and we should at least be armed with different ideas and plans for our economy."
A Shifting Automotive Landscape in Canada
The report outlines a significant transformation in Canada's auto industry over the past two decades. In 2005, U.S.-headquartered automakers owned plants accounting for 74% of vehicles built in Canada. Today, that figure has fallen to less than half. Japanese automakers Toyota Motor Corp. and Honda Motor Co. Ltd. now account for the majority of production.
On the consumer side, the change is equally stark. Canada imports about 90% of the vehicles its residents purchase. The U.S. share of those imports has plummeted from 66% in 2005 to just 49% in 2024. Meanwhile, imports from Mexico and South Korea have surged, highlighting a diversified and globalized supply chain.
The Core Challenge: Scale and Capital
The dream of a Canadian car company faces immense practical hurdles. The industry requires billions in capital, faces intense global competition, and involves the complex engineering of road-safe vehicles. Any new entrant would need to achieve significant scale to be viable.
However, the report identifies one key domestic advantage: market size. Canadians purchase between 1.6 million and 1.9 million vehicles annually, a substantial market by global standards. "The Canadian market could absorb enough cars to help a (homegrown) company get started," Sweeney noted. "But then we'd also have to find other markets."
The analysis frames this moment as a turning point. With the traditional model of U.S. dominance eroding and trade relations under strain, conversations about national automotive sovereignty are likely to persist. While the birth of a Canadian car company by 2026 remains a long shot, the report concludes it is a contingency worth serious consideration in an increasingly unpredictable world.
