Canada needs a domestic carmaker of its own, head of auto-parts industry group says

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There hasn’t been a Canadian-owned carmaker in more than 100 years. Flavio Volpe, who represents the country’s auto-parts makers, thinks that should change.

Mr. Volpe, head of the Automotive Parts Manufacturers’​ Association, is spearheading an industry push to explore the feasibility of creating a domestic automaker. The move would allow Canada to shed its some of its branch-plant status and control a part of its manufacturing destiny at a time when U.S. President Donald Trump is upending global trade with a chaotic program of import taxes.

The project would tap the Canadian manufacturing and technology sector – much of it centred in Southern Ontario and Quebec – to develop and build an all-new vehicle.

Mr. Volpe calls it the Canada Car.

But that’s about the only thing that can be said for sure about the idea, first reported by The Globe and Mail in May.

The proposal will be in the hands of a steering committee by January, and within a year there will be a decision on whether the project goes ahead, he told The Globe on Monday. Ownership, structure and even the product are to be decided, he said.

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In a speech on Monday at the Canadian Manufacturing Technology Show in Toronto, Mr. Volpe floated the possibility the project could take the shape of an off-road vehicle to help guard Canada’s sovereignty in the Arctic. This would allow it to tap the rise in spending as Ottawa boosts its defence budget to 5 per cent of gross domestic product by 2035.

“If we don’t put our hands up, if we don’t make stuff to sell to other people, the service sectors, the innovation sectors here will always be looking for a customer outside of Canada,” he said.

Mr. Volpe points to Vietnam, Turkey and Mexico as countries that have used or plan to use private and public money to build domestically owned carmakers.

Fraser Johnson, a professor at Western University who teaches supply chain management and operations, said the idea is not feasible but “the discussion is a healthy one.”

He said it reminds him of the McLaughlin Motor Car Co., which made cars in Oshawa, Ont., before being taken over by General Motors in 1918.

The Canadian market is too small, and lacks the supplier base and talent pool to run a stand-alone auto factory, he said. “There are all kinds of issues,” Prof. Johnson said. “Operationally, technology, organizationally and financially it doesn’t make sense.”

Still, Mr. Volpe says the project has the expressed support of the Canadian manufacturing sector, known for the innovation and talent serving the North American automotive industry. Private equity, institutional investors, artificial-intelligence companies and others have expressed interest, he said.

The Canada Car concept was partly inspired by Project Arrow, a Canadian-made electric car developed and built by Mr. Volpe’s group. Although the Arrow will never be commercially viable – it cost $21-million to make – Mr. Volpe says it is a demonstration of the capabilities of the Canadian auto and technology sectors.

“We know we can do things and we can make them competitive,” Mr. Volpe said.

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Canada-U.S. trade talks have stalled ahead of the July 1 deadline to review the continental free-trade agreement. Meantime, U.S. companies are paying 25-per-cent tariffs on non-U.S. content in Canadian-made automobiles, and 50-per-cent tariffs on Canadian metals.

Automakers in Ontario – General Motors, Stellantis, Honda, Toyota and Ford – have responded by implementing one or more measures, including raising prices, delaying investments, slowing production and, in some cases, laying off workers.

Lana Payne, national president of the Unifor union, said the government has a role to play in defending the auto industry and the 500,000 jobs it supports. She said governments in Germany, Indonesia and other countries have made or are exploring investments in domestic automakers.

Mr. Volpe said Mr. Trump has inexorably upended global trade policies, altering balances in ways that won’t be reversed when he leaves office. “We need national projects,” Mr. Volpe said. “It’s not going back to normal.”

Editor’s note: This article has been updated to clarify that automakers in Ontario have responded to tariffs by implementing one or more of these measures: raising prices, delaying investments, slowing production and laying off workers.