Did you know Canada has given birth to the cars like Dodge Challenger Hellcat Demon which are the most iconic American muscle cars ever built?
Canadian car era came at the time of the Brass Era from the 1910s-1920s when all the vehicle components were finished in brass trim. At that time Canada an 11 major manufactures and most of them were based in Ontario. Ontario is the part of the country that was close to Detroit home of Ford, Chrysler, and GM.
By 1923 Canada also became the 2nd largest auto-maker in the world and also had a high tax on import trades with the U.S. Market.
The Market Crash
In 1931 over 75% of all Canadian Companies went belly up due to the high tariffs i.e. import taxes. But the 3 companies stayed there as they already built the all-American model cars in Canada. This gave them access to the British nation because Canada was a part of the British Empire. Basically, Canada was making cars that were sold in the US market. (expatfinancial.com)
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The 785 Million Loss
AS these cars were made in Canada, it affect the country a lot. They were paying more money to send the cars to the US than selling cars made in Canada to Canadians. They lost over $785 million by doing these imports. But more money was only part of the problem.
Autopact
In 1964 Canada and the US came together to solve the money problems that were developed. It was called the Automotive Products Trade Agreement of 1964, shortly called the Auto pact. This was the time of post-world war and Canada was unable to keep up with the demand. This resulted in less business between the US and Canada which was bad for Canadian makers and dealers.
The Auto pact solved the problems by adding the points like. Cut the production cost, reduce prices for Canadians. They also mentioned broadening the auto market. This pact specifically said that there will be a limited production to sales ratio (1:1).
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Other Companies
By seeing the auto pact other car brands also wanted to be in the Canadian market. Companies like Honda Toyota Isuzu gained their presence in Canada. This made Canada able to consider them in the duty-free export to the United States. The duty-free export was a profitable move for Canada. As Canada was not technically involved in the car market it was all good.
The Middle Man
Canada had become just a middle man, where other cars were built and were sold to other countries. They kept the flow of car manufacturing and sold them to the US. All of this production did maintain the 1:1 ratio as well.
Free Trade Agreement
In 1985 US came up with some points that said, eliminate duty remission into Canada. And adopt free trade between nations which was good for Canada’s economy. But this was a downside for the Canadian automotive industry. The automotive industry was no more Canadian, and all were foreign countries.
In 1989, the free trade agreement came into effect, that got rid of any tax costs between Canada and the US. This largely profited the US-based companies.
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