Auto sector undergoing fundamental transformation: KPMG survey

The Auto is sector changing

Photo: The Canadian Press

Automotive Parts Manufacturers’ Association President Flavio Volpe shows Prime Minister Mark Carney, centre, the Project Arrow 2.0 prototype vehicle during a tour of an auto parts plant in Woodbridge, Ont., Feb. 5, 2026. THE CANADIAN PRESS/Eduardo Lima

A new survey shows Canada's auto sector is rethinking supply chains and seeking new markets as it faces tremendous pressure from the trade war started by the United States.

The KPMG Canada survey of 128 automakers and suppliers found that 82 per cent are actively adjusting their supply chain strategies and 70 per cent are exploring international markets.

It also found that 63 per cent of original equipment manufacturers and suppliers have increased prices because of the new tariff environment and 62 per cent have substantially changed their product mix because of it.

Dave Power, who leads KPMG Canada's automotive division, says in the report that the changed trade relationship with the U.S. has fundamentally changed the automotive sector and is creating uncharted risks across the ecosystem.

The foundational changes underway are leading to unpredictability, but 40 per cent of executives surveyed believe they can emerge stronger with the same business model, 17 per cent expert to have to fundamentally change their company and nine per cent think they might fail.

Along with new markets abroad, manufacturers are also looking to diversify into other sectors with 51 per cent already transition their business to defence production.

"We're seeing a foundational and irreversible transformation underway in the Canadian auto sector," said Power in a statement.

"The implications down the supply chain and across the economy will be significant."