- Carmakers are sourcing globally but Canadian auto parts manufacturers remain focused on the domestic and U.S. markets, a Scotia Economics report says.

General Motors, Ford and Chrysler account for nearly 90 per cent of the sales of Canadian parts plants, and the value of Canadian parts in the average North American-built vehicle declined to $1,869 last year, down more than seven per cent from the 2004 peak of $2,019, according to the study released Monday.

Suppliers of brakes, engines, electrical and steering systems are under the most intense pressure, with their content per vehicle slumping almost 20 per cent in the past two years, the survey says.

"Canada has several world-class auto parts companies that are continuing to gain market share, even in the current turbulent environment," said Scotiabank auto industry specialist Carlos Gomes.

However, "the rest of the Canadian supply base has seen its content decline by roughly 10 per cent (since 2004), with the drop-off accelerating last year."

The decline in Canadian auto parts shipments, after more than a decade of consistent gains, reflects lower vehicle production at the traditional Big Three, the rising Canadian dollar, "and virtually no exports to the rapidly growing emerging markets of Asia and Latin America," the study says.

"As result, while global vehicle production continued to scale new heights in 2006, the value of Canadian auto parts shipments slumped below $30 billion, the lowest level since the 2001 economic downturn."

Gomes notes that a similar trend is evident in the United States, where domestic parts suppliers have less than 60 per cent of their home market.

He also observes that despite the shift in vehicle production to the American South, "the traditional vehicle-producing states, Michigan and Ohio, remain the destination for nearly half of all Canadian auto parts exports to the United States."

Gomes said vehicles produced in the U.S. South have only one-third the Canadian content of those assembled in Michigan.

He also noted that automakers plan to reduce second-quarter vehicle production in Canada and the United States to an annualized rate of 13.8 million, down from 14.3 million in the opening months of 2007.