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Domestic or Import? What's What These Days?
The connotations of many words and expressions have changed over the years. ?Marriage?, ?workplace? and ?mouse? are a few of the everyday words that have taken on entirely new meanings in Canada.
In the auto industry, the terms ?domestic? and ?import? have certainly changed meanings, and today, they may even defy definition.
Over the years, consumers have come to rely less on the old terminology (if they even use these terms at all), but many media and industry people choose to cling to outdated designations of ?domestic? and ?import?.
In 1970s and 1980s, Canadian consumers, industry workers and the media simply viewed American automobile brands (e.g. Ford, Chrysler and General Motors) as Canadian domestics and Asian/European brands (e.g. Nissan, Honda, Mercedes Benz) as imports.
In Canada, today, there are 24 brands of vehicles sold from coast to coast. None of these vehicle brands is Canadian-owned. No important head office decisions (i.e., whether to open or close manufacturing plants) are made on Canadian soil.
Does this mean that all 24 brands in Canada are imports? Does this then mean that no domestic, automotive industry exists in Canada? The Canadian-owned Bricklin (manufactured in the mid-1970s) and the McLaughlin touring car (manufactured in 1907) may be the only brands that could be classified as Canadian domestics.
To use an example from outside of the automotive sector, as an illustration, Bombardier is a Canadian-owned company that builds regional aircraft, business jets and rail transportation equipment. The company?s head office is in Montreal.
Although the majority of Bombardier?s employees work in Canada, thousands more are employed in Mexico, the US, Europe and China, with manufacturing facilities and sales and service centres situated around the world. Canadians can accurately view Bombardier as a domestic manufacturer.
The definitions of ?import? and ?domestic? are extremely complex, but let?s examine some facts that might help us to better understand the issues.
In 2004, Ontario overtook Michigan as the North American jurisdiction that manufactured the most vehicles ? 2.7 million vehicles. Also in 2004, Canadians purchased 1.534 million vehicles. This translates into a very impressive 1.76 to 1.0 build-to-buy ratio.
Canada ranks as the seventh largest automobile producer in the world, behind the US, Japan, Germany, France, South Korea and Spain; Canada?s number one export industry is the automotive industry.
When you examine the manufacturers? ownership structures, the old definitions of ?domestic? and ?import? really are misleading. For instance, Honda is one of the major Japanese-owned companies with vehicle manufacturing facilities and dealerships located in Canada. Many of the parts, materials, goods and services needed to manufacture Hondas in Alliston, Ontario are sourced from Canadian suppliers. >From a Canadian consumer perspective, how could anyone call Honda an import?
The production and development of Volvo cars and trucks take place in Sweden, Brazil, Belgium and the US. Under the old, pre-globalized mindset, Volvos sold in Canada would be classified as imports.
But, Volvo is now owned by Ford, which has traditionally been viewed as a domestic carmaker. Does this now make Volvo a domestic? Ford also owns Mazda, Land Rover and Jaguar ? should these vehicles be labeled as ?imports? or ?domestics??
Chrysler is now owned by Daimler-Benz, a German company, yet I constantly hear Chrysler described as a domestic carmaker.
General Motors imports Korean-made cars to be sold by General Motors dealers in Canada ? are these Korean vehicles considered ?imports? or ?domestics??
Over the past decade, globalization, mergers, strategic alliances and the supply chains of today?s automobile manufacturers have changed dramatically, which makes trying to classify automotive manufacturers/distributors along old boundaries unfair.
Confused? Don?t be ? any model of vehicle that is built in Canada (regardless of who owns the brand) should be deemed a ?domestic?. Any car that is built outside of Canada must be called an ?import?.
No automotive company should be labeled as ?domestic? or ?import? - only some of their individual models could be regarded as such.
This means that, today, many New-Car dealerships sell BOTH domestics and imports under one roof.
Ken Shaw Jr. is President of the Toronto Automobile Dealers Association and is a new-car dealer in Toronto. E-mail comments to president@tada.ca
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