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Chinese Auto Makers Can Speed Canada's Recovery

The North American Auto Show, which begins next week, was once Detroit's moment in the sun. This year, it’s Canada that might be enjoying the afterglow. The nation's auto industry could is looking to partner abroad and seek out more foreign investment. If successful, the effort could help lift the broader Canadian economy.

Canada now wields significant influence in the auto industry’s turnaround, and it should make U.S. manufacturers nervous. A sputtering Ford, a bankrupt and chaotic General Motors and a crippled Chrysler have left domestic auto makers with a 42% share of the North American car market, down from more than 90% in the 1970s. That decline has weighed on many aspects of the American economy, including the labor market and the housing sector.

Making cars is even more important to the Canadian economy, says Dennis DesRosiers, founder of DesRosiers Automotive Consultants, a Toronto-area research firm focused on the Canadian auto industry.

Roughly 2.54 million cars and light trucks were made in Ontario, the country’s most populous and heavily industrialized province in 2008, according to the Ontario Ministry of Economic Development and Trade. That’s more than Michigan's 2.23 million. Before several factories were scheduled to be closed, there were 14 Canadian plants along a 260-mile corridor from Windsor to Oshawa, run by Ford, General Motors, Chrysler, Toyota and Honda. The last two are among the best-performing auto plants in the world, DesRosiers says.

"One in seven jobs in Canada is tied directly or indirectly to the auto industry," DesRosiers says. "In the U.S., it's one in 7.5."

As U.S car manufacturers closed several of their Canadian subsidiaries' plants, that put about a third of that 160,000-person vehicle-making work force on the dole. Now, Canada wants to get back to work, boosting auto production and embracing the future of green auto manufacturing, says Eric Shapiro, a spokesman for the provincial trade ministry.

Thus may begin an interesting chapter in the globalization of the car, which is now made and driven in huge markets that were hardly conducive to four-wheeled personal transport as recently as 10 years ago. China supplanted the United States as the largest car market in the world last year, and India's Tata Motors Chairman Rata Tata said Tuesday that the company plans to sell the Nano, the world's cheapest car, in the U.S. market within three years.

"We also recognize there is a market not only in developing countries, but possibly in the developed countries," Tata said at a press conference at the New Delhi auto show. "For the United States we need a car which has a larger engine, and we need additional crash-test modifications, and we are in the process of doing it."

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