How the automotive industry is helping boost the Canadian economy thanks to a weak loonie

The declining dollar is proving to be a good thing for the Canadian Automotive Industry

Although the steep decline in oil prices in recent months has contributed to the Canadian dollar's 11-year low against the U.S. greenback and provinces like Alberta and Saskatchewan have taken a major hit thanks to the drop in oil production, the good news is that other areas of the economy can actually stand to benefit from a dwindling dollar, as is the case in Ontario where the automotive industry has been flourishing thanks to an uptick in auto manufacturing.

So how exactly is a declining dollar contributing to economic growth in the Canadian automotive industry?

With the Canadian dollar dropping to levels not seen since 2004, exports have become far more attractive to American buyers. According to Statistics Canada, Canadian exports to the United States rose by 6.3% to $44.6 billion in June 2015, the best month-over-month increase in exports we've seen since December of 2006. 

With respect to the Canadian automotive industry and its contribution to economic growth, the rise in exports can be directly attributed to the increase in automotive production, where manufacturers shipping vehicles directly to the U.S. market has been picking up major steam.

“The rebound of our auto sector in this country is one of Canada’s biggest economic and industrial success stories of the last five years,” said Prime Minister Stephen Harper, and with several major international automakers recently announcing their long-term commitment to continue manufacturing in the country, we shouldn't expect to see things slowing down here anytime soon. 

Ford Motor Co. announced this year that they'd be investing $700 million into its assembly plant in Oakville, ON, securing 2,800 high-paying jobs where the Ford Edge crossover SUV is being produced. According to Ford, demand for utility vehicles has skyrocketed up to 88% since 2008 and now accounts for 19% of the global automotive market. Honda Canada also recently revealed it was going to invest $857 million at it's manufacturing plant in Alliston, Ontario, accounting for 4,000 new jobs and a generous boost to the Ontario job market.

With no signs of slowing down in the automotive industry anytime soon, Canada is on track to moving back up in the ranks of becoming one of the largest auto producers in the world, currently sitting at 10th place with over 2.2 million vehicles manufacturer in the country each year. 

It wasn't too long ago that Canada ranked in 7th place, with the short-lived high Canadian dollar period to blame for the slowdown in exports. Some industry analysts are estimating that overall vehicle sales will surpass 17 million in the U.S. market this year.