Honda Canada announced Monday that its Alliston manufacturing factory will produce the next- generation CR-V model destined for the European Union (EU) market, marking the first time that the auto company will export vehicles to Europe.
Canadian Prime Minister Stephen Harper hailed the announcement made by Honda Canada.
"Today's announcement is significant for Canada's automotive and advanced manufacturing industry. Our government has worked hard to open new markets for Canadian companies and we are pleased that Canadian vehicle manufacturers like Honda are already preparing to take full advantage of the many benefits that the Canada-EU Trade Agreement will generate," said Harper.
Honda Canada's decision was made possible by the historic market access provided by the still-to-be ratified Canada-EU Trade Agreement, which is paving the way for increased Canadian exports to the world's largest integrated market of more than 500 million consumers.
Under the Canada-EU Trade Agreement, Canadian auto manufacturers will have the ability to export vehicles annually to the EU on a preferential basis under a flexible rule of origin.
Also under the agreement, the EU will eliminate the 10 percent tariff on passenger vehicles providing Canada's auto makers with a competitive advantage in the EU market. It will also eliminate, immediately upon entry into force of the agreement, its tariffs on auto parts, which run as high as 4.5 percent.
Based on production volumes, Honda Canada was the fourth- largest automaker in Canada in 2014, with 393,007 vehicles manufactured.
Since 1986, Honda Canada has invested more than 3.9 billion Candanian dollars (about 3.4 billion U.S. dollars) in Canada, and each year it sources nearly 2.1 billion Canadian dollars in goods and services from Canadian suppliers.
Honda Canada directly and indirectly employs more than 19,000 Canadians, including more than 4,000 in Alliston.
The Canadian auto industry is highly export-oriented, with approximately 90 percent of auto production exported every year.
Canada's automotive industry is a key driver of the economy, contributing 10 percent of the country's manufacturing gross domestic product and 13 percent of total merchandise exports. The industry employs approximately 117,000 Canadians directly and another 377,000 through its large supply chain of more than 730 companies, including many small and medium-sized enterprises across the country.