Canada Charts a Different Course

If you go by landmass, it’s one of the biggest countries on Earth, though its entire population could squeeze into suburban Los Angeles. Maybe that’s why Canada has long been the invisible neighbor to the North.

Its politics are certainly different, and it does have its own national culture, yet despite an outsized affinity for hockey, and for homegrown celebrities like k.d. lang and the classic pianist, Glenn Gould, Canada, and the U.S. have traditionally had a lot in common. Like their auto industries.

True, Ford of Canada is just getting around to celebrating its 100th anniversary, a year after its parent company, in the United States. But thanks to various, long-standing trade agreements the 3000-mile border has been effectively invisible to automakers and their customers.

At least it has been until now, but suddenly, things seem to be changing, as TheCarConnection discovered during a visit to the 2004 Toronto Motor Show.

No more rehash

The annual event has traditionally served up little more than a rehash of what’s already appeared in the U.S. Yet this year, Toronto’s press preview opened with the introduction of Nissan’s new X-Trail SUV. This Altima-based crossover will soon appear in Canadian showrooms, but there are no plans to sell it in the States.

2004 Jaguar X-Type WagonNor does Jaguar intend to launch its all-new X-Type station wagon on the U.S. side of the border. It fits a growing market for wagons in Canada, Jaguar officials believe, even though such vehicles remain anathema to Americans.

The Toronto Motor Show brought the premier of the Pontiac Pursuit, a Canada-only sedan sharing platforms with the new Chevrolet Cobalt — which will be sold throughout North America. Then there was the Kia Tuner, a sporty version of the Korean carmaker’s entry-priced Rio sedan.

2004 Smart city coupeDaimlerChrysler announced that Canadian motorists will get the opportunity to buy a Smart car this autumn, over a year before the division debuts in the U.S. The tiny, two-seat Smart City Coupe, barely eight feet nose-to-tail, will appear as a 2005 model. When Smart sails into the States in 2006, it will debut with a larger, ute-like crossover vehicle, dubbed “formore.”

Another five products produced specifically for Canada premiered during Montreal’s annual auto show, in January, including a hatchback version of the Toyota Echo, and Chevrolet’s tiny Optra.

This isn’t the only time manufacturers have produced cars specifically for Canada. It was commonplace in the early years of motoring, before free trade agreements opened the borders. And Canada’s unique franchise laws have sometimes required companies like GM to produce multiple versions of a product sold under a single nameplate in the U.S. The Chevy Metro, for example, also appeared as the Pontiac Firefly.

Still, said Phil Martens, Ford’s director of North American product development, “You’re seeing this trend this year more than at any other time.”

Small cars turn the tables

But why? A number of factors seem to be coming into play, suggested Mike Grimaldi, president of General Motors Canada, noting that “Here, small cars are a big part of the market.”

That, in turn, reflects some of the subtle but significant differences between the two countries. For one thing, Canada has a lower average income, yet markedly higher taxes supporting an economy that’s more Euro-socialist than Stateside laissez faire.

Taxes are especially high on gasoline, which runs the equivalent of about CAN$2.70 a gallon in Ontario and over CAN$3.00 in many other parts of the country.

Over the years, as fuel taxes have risen, Canadian buyers have steadily downsized. On both sides of the border, Toyota and Honda annually battle it out for market leadership, yet while the midsize Camry and Accord models are the perennial passenger car chart toppers in the U.S., it’s the compact Corolla and Civic models that duke it out in Canada.

Fuel prices have also resulted in a boom in demand for diesels. Where the high-mileage powertrains account for barely eight percent of Volkswagen’s U.S. sales, the figure is approaching 40 percent in Canada — which was reflected by the automaker’s introduction of the Canadian-only Passat TDI Sport Edition.

If you’ve already got the technology, it’s not difficult to come up with a unique model exclusively for one market. Nor was bringing the X-Trail to Canada very difficult for Nissan. Sure, it had to make scores of minor, market-driven changes, but the vehicle was already on sale in most other parts of the world.

But coming up with Canada-only variants is a good bit more challenging for the Big Three, cautioned Ford’s Phil Martens. Since most of their products are only aimed at North America, margins are lower to begin with, especially on the small cars Canadians prefer.

“But consumers don’t care about margins,” he acknowledged, so domestic manufacturers like Ford, “have to figure it out (and) get in the game,” or risk losing market share.

One possible approach, said Martens, would be to import some foreign products, such as Ford’s Ka minicar, currently sold in Europe, but not North America.

Increasingly willing to voice their independence from the U.S. — and back it up with their dollars, Canadians want vehicles that reflect their own needs and sensibilities. As with Latin America, that means more than just sheetmetal. It also affects marketing — as General Motors learned while readying the launch of its newest Buick sedan.

In the U.S., it will appear as the LaCrosse, in Canada as the Allure. Shortly before the car was set to debut in Toronto, GM officials learned that the original moniker referred to an act of self-gratification in French Canadian slang and hastily switched nameplates. “In the States,” laughed a Canadian journalist, “LaCrosse is a sport. Here it’s a sin.”

As automakers are quickly learning, it’s also a sin to take the Canadian market for granted.

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