OTTAWA (CP) -- Canadian auto parts makers face another tough year with production falling by eight percent in the face of the strong loonie and declining U.S. demand, says the Conference Board of Canada.
The economic think-tank's outlook notes that despite aggressive price cutting and sales incentives, American auto sales are expected to be the weakest in a decade.
As a result, Canadian auto parts manufacturers, which ship most of their exports south of border, will experience a third consecutive year of decline.
The prospects for the industry will begin to brighten somewhat in 2009, the Conference Board adds.
The opening of Honda's Alliston, Ont., engine plant later this year and increased production associated with Toyota's new RAV4 plant in Woodstock, Ont., will help boost production by 6.9 percent in 2009.
Auto parts production is further expected to increase by an average of 2.2 percent annually between 2010 and 2012.
In line with declining production this year, the sector's profits are expected to fall by 14.7 percent to $1.5 billion, before rebounding beginning in 2009.