OTTAWA - A new forecast says the Canadian automotive sector is poised to return to profitability next year, if manufacturers can continue to streamline their product lineups, slash costs and innovate.
The Conference Board of Canada says the auto sector isn't necessarily out of trouble but there are encouraging signs that 2010 will be a profitable year and profits will continue to strengthen each year through to at least 2014.
It says labour agreements between the Canadian Auto Workers union and subsidiaries of Chrysler, General Motors and Ford (NYSE:F) have cut the manufacturers' costs.
General Motors and Chrysler have also reduced costs in other ways, such as cutting dealership networks, and received a total of $13 billion of funding from the Canadian and Ontario governments in the form of loans.
The Conference Board says the industry will close 2009 with a $2.3-billion loss before taxes but Canadian auto assemblers including the Japanese carmakers Toyota and Honda will have a collective profit of $100 million in the final quarter.
It also expects before-tax profits for next year will be $263 million, a number which will continue to rise each year until 2014 when it's projected to be just under $2 billion.