Is it time to finally take the dream of a Canadian automaker seriously? Flavio Volpe makes his case

As Prime Minister Mark Carney casts about for nation-building projects, the most prominent representative of Canada's auto sector has one in mind for him.
Automotive Parts Manufacturers' Association (APMA) president Flavio Volpe, who advocates on behalf of hundreds of domestic companies that supply components to global automakers, thinks it's time for this country to seriously consider launching an automaker of its own.
It's an idea that has been idly kicking around the industry, with only a few marginal failed attempts to show for it, through many decades of Canada boasting only foreign-owned assembly plants for passenger vehicles.
But over the course of a lengthy interview, Mr. Volpe framed the crisis of U.S. President Donald Trump's trade wars – which has contributed to international carmakers slowing production, laying off workers and pausing investments at Ontario sites – as an opportunity.
It's a chance to move past a branch-plant mentality and potentially reap long-term benefits from a Canadian-headquartered company, Mr. Volpe said.
'We are very likely to make peace with the Americans,' he said. 'But we should never go back to trusting that peace. We should never go back to the thing that I think people across the spectrum in this country criticize Canada for, which is lack of national ambition.'
Building up a Canadian carmaker, he contended, would ensure that the country maintained broader manufacturing capacity that's important for its economic sovereignty. That's because of infrastructure that can be leveraged toward other products as well.
At the same time, he said, it could boost domestic innovation and productivity.
'An automaker's headquarters does things that automaker operations can't do. Decision making, research and innovation, and engineering hubs cluster around it.'
Mr. Volpe's pitch for a Canadian automaker flows somewhat from Project Arrow – a successful APMA-led effort to build a prototype electric vehicle made entirely of Canadian-made parts – although he stressed that he is not suggesting that particular model be commercialized.
Nor, he said, is he calling for Mr. Carney's government to immediately launch some sort of publicly owned company.
What he wants, he said, is for Ottawa – in partnership with industry, and with the provincial governments of Ontario and probably Quebec – to launch a feasibility study into what it would take to get a Canadian automaker off the ground and what form it could take.
It would cost somewhere between about $5-million and $20-million to pull in the best and brightest from across the sector to thoroughly explore the prospect, he assessed, and in the process hopefully validate the concept and build momentum to attract potential private investors or proponents.
Based on Globe and Mail interviews with others around the industry, the exploratory exercise would not lack for willing participants, after weeks of quiet canvassing by Mr. Volpe.
That includes Unifor, the union representing Canadian autoworkers, whose president, Lana Payne, said a domestic automaker can no longer be dismissed out of hand amid shifting international trade relationships.
Echoing a point emphasized by Mr. Volpe, Ms. Payne noted that several other countries that have previously only been automotive branch plants – including Mexico – are currently in the midst of trying to launch their own companies, and that Canada risks being an outlier if it doesn't seriously consider it.
Dennis Darby, the president of the broader industry association, Canadian Manufacturers and Exporters, was slightly more skeptical but remains open-minded: 'The devil will be in the details,' he said, 'but it's certainly worth looking at.'
At the same time, the prospect prompts eye-rolling from some veteran industry insiders, who tend to point toward fleeting and failed past attempts (most famously the Bricklin SV-1 sportscar, out of New Brunswick in the 1980s), lack of patient capital and problems of scale for a relatively small country.
'It's just not practical,' summarized Greig Mordue, a McMaster University chair in advanced manufacturing policy and former Toyota Canada executive.
Mr. Volpe was ready to push back on some of those criticisms. For one thing, he said, the automaker he's loosely envisioning would be an industry-wide collaboration, drawing off more than enough core competencies in the country's industrial heartland to produce appealing vehicles – a far cry from the small startups attempted previously.
For another, the industry is in enough flux globally, including through the transition to electric vehicles, to allow more room for new entrants.
At the same time, it was clear – both from his pitch, and from the disparate reactions to it – that there are a couple of big, overarching questions that the feasibility study might usefully address.
The first is around the potential market, and how a Canadian carmaker could reach enough of it to be viable, which would ultimately require selling hundreds of thousands of vehicles each year.
The vast majority of vehicles assembled in Canada have long been exported to the U.S., which would presumably not be the aim given the circumstances under which this effort would be launched.
That means figuring out how much of the Canadian market (with new vehicle sales a little under two million annually, currently consisting mostly of a wide variety of foreign-assembled cars) a Canadian company could reach, and whether it could also find overseas takers.
The domestic reach could be helped a little by the fact that assembly platforms for EVs – which are what a new company would likeliest be producing – are more flexible than for gasoline-fuelled cars. In other words, it could be possible to make multiple models to suit different consumer tastes, more easily than previously.
Still, all sorts of unknowns would need to be addressed, from whether there are enough niches to realistically be filled, to how exactly the infrastructure to get the vehicles to consumers (including dealership networks) would be set up.
The other, even less settled question is around who would own it.
Mr. Volpe expressed openness to some degree of government ownership – whether that meant launching and then selling it, or holding shares. He argued that such structures are already explicit in some countries (such as state-level government in Germany holding equity in Volkswagen Group) or effectively the case in others where governments have repeatedly intervened to prop up automakers when they've struggled.
He also mentioned other potential proprietors or investors – from Canadian parts-making giants (Magna International being the most obvious example), to pension funds, to individual entrepreneurs. The feasibility study, he said, could help determine whether certain tax measures or other incentives could attract that sort of capital.
And, he suggested, it could also take the measure of other options short of starting a company altogether from scratch, such as partnering with or even acquiring a distressed foreign automaker.
Or maybe, Mr. Volpe acknowledged, the exercise would conclude that there simply wasn't a viable pathway – an outcome he said he'd be fine with.
But perhaps his least contentious point is that if Canadian governments could commit billions of dollars in recent years to subsidizing foreign companies' EV and battery investments here – investments he supported – then it's not too much to ask that they invest a small fraction of that to explore more homegrown possibilities.
'The Prime Minister challenged the country to be more ambitious,' Mr. Volpe said. 'Well, in the automotive space, there could be nothing more ambitious than to launch a carmaker.'

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