TORONTO — Magna International Inc. chief executive Swamy Kotagiri says the auto industry can't make it through heightened economic and geopolitical headwinds without clarity on the issues the industry needs to work toward solving.
TORONTO — Magna International Inc. chief executive Swamy Kotagiri says the auto industry can't make it through heightened economic and geopolitical headwinds without clarity on the issues the industry needs to work toward solving.
The auto industry has been facing uncertainty from trade tensions with the U.S., competition from Chinese automakers and shifting policies on electric vehicles. Canadian consumers are also watching their wallets and prioritizing value. Kotagiri said it's important for policy-makers and other stakeholders to lay out what problems they're actually trying to figure out.
"If we misdiagnose the problem, I think we will confidently deploy the wrong solution and then, we have to live with the consequences for many, many years to come," he said. Kotagiri, who was speaking at an auto forum put on by the Toronto Region Board of Trade in downtown Toronto on Tuesday, said the challenges facing the industry can't be mitigated by one policy.
Often, he said policy-makers, consumers and stakeholders in the auto industry try to tackle the same problem but from different perspectives. If the goal is to sustain the existing auto sector and keep workers employed, then it becomes a legacy asset protection problem, he said. Solutions, then, would focus on targeted subsidies, employment incentives and transitional support for incumbents, Kotagiri said.
However, he said,"We should be honest about the results.
"Even with sustained support, employment in Canadian auto manufacturing ... has been flat to declining in recent years, while growth has shifted downstream in a different path," he said. While there's nothing wrong with the policy, Kotagiri said clarity is important.
"We have to realize that this is not a growth strategy. And the real risk is not about choosing this path, the real risk is choosing this path and pretending it leads somewhere else," Kotagiri said.
However, if the focus is on affordable vehicles for consumers, Kotagiri said the solution changes to a consumer-focused, cost-of-living problem approach. That means lowering prices for vehicles, offering more choice to consumers and having access to innovation, Kotagiri said.
"If affordability is the priority, then policies and structures need to reinforce scale, efficiency and competition and not work against them," he said. A new car in Canada costs an average of $63,439, according to AutoTrader's fourth quarter report. That's 30 per cent higher than pre-pandemic levels.
"The reality is unavoidable trade-offs within how markets are structured and the outcomes they deliver," Kotagiri said. "When supply chains are constrained, there's no question costs tend to rise, regardless of what the intent is," he added, hinting at the global upheaval in supply chains from the pandemic years.
There's also an urgent need for building resiliency and broadening capabilities in the auto industry, which the Magna CEO said requires policies to diversify and invest in skills instead of specific factories.
"We always use the term in Magna, 'Control the controllable,'" Kotagiri said. He said he would apply that logic to a larger geopolitical and economic context.
"The objective in this case, I would say, is to keep Canada essential, reduce dependency on any single system or regime," he said. Kotagiri said the industry has to think systematically, rather than in silos, when adopting policies to reinforce resilience.
For example, he said the focus needs to move to re-skilling and retraining across the industry, but more holistically.
"How do we build infrastructure that is fast, predictable and reliable? How do we ensure dependable cost-competitive energy? And how do we structure capital so risk is shared and it's not concentrated?
" he said. "This approach does involve uncertainty. And that's the point, because we are living in a world where security cannot be taken for granted.
" As the Canada-U.S.-Mexico free trade agreement nears its review in July, Vic Fedeli, Ontario's minister of economic development, job creation and trade, said the only way forward is to have that agreement reinstated. "There is only one solid approach forward and that is to have North American free trade at the onset. Period," he said during a fireside chat at the forum.
"That is going to be the ultimate goal. " Ontario is home to several major automakers and auto parts companies and contributed $75 billion in exports in the vehicle manufacturing, body and trailer manufacturing and parts manufacturing sectors in 2023, according to Ontario Vehicle Innovation Network. This report by The Canadian Press was first published May 12, 2026. Companies in this story: Ritika Dubey, The Canadian Press
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