Article
Southwestern Ontario Auto Industry Takes Hits as Tariffs Continue and CUSMA Talks Loom
May 5, 2026 4 Minute Read
Southwestern Ontario’s automotive sector has absorbed some big blows over the past year amid a slowing vehicle sales market, raising concerns about the knock-on effects for the region’s industrial real estate market.
At the same time, notes CBRE’s Larin Shouldice, the bulk of auto manufacturers and parts suppliers have been holding off on making any big moves – neither expanding nor contracting – as they await tariff clarification and renegotiation of the Canada-US-Mexico-Agreement (CUSMA).
“It seems like most groups are taking a wait and see approach and not making big commitments as there’s just too much uncertainty at the moment,” Shouldice says.
“That’s primarily due to question marks around tariffs and the outcome of CUSMA talks and also because of the uncertain economic climate, which is impacting vehicle sales.”
In January 2026, Swiss auto parts supplier Autoneum said it was shuttering its 130,000 sq. ft. factory in London, ON, and consolidating operations at its facility in Tillsonburg, ON. The company said the decision was made in response to a decline in automotive industry volumes.
Then in April 2026 Volkswagen announced that it would not be making electric vehicles at a plant in Tennessee, one of two assembly plants that its PowerCo electric vehicle battery plant in St. Thomas, ON, had been slated to supply starting in 2027.
The PowerCo plant, currently under construction, will now supply a single Volkswagen assembly factory in South Carolina. “There is still buzz and positivity around the plant,” says Shouldice, noting that foundations have been poured and the steel structure is going up. “But there are some nerves as well.”
CAMI Plant Shutdown Cuts Deep
All of this comes in the wake of Magna’s 2025 decision to wind down operations at its 80,000 sq. ft. Qualtech Seating Systems plant in London, where it had been making seat assemblies and foam for General Motors’ BrightDrop electric delivery van.
The vans were being built at GM Canada’s 2.0 million sq. ft. CAMI Assembly plant in Ingersoll, ON, before GM ended production and shuttered that facility last spring.
The CAMI plant had previously manufactured the Chevrolet Equinox SUV before it retooled for the BrightDrop, and now the entire future of the facility is uncertain. “We haven’t heard anything about what’s happening,” Shouldice says. “There is nothing lined up yet to replace the BrightDrop production.”
Shouldice notes that there are still bright spots in auto manufacturing plants in the region. The Windsor Assembly Plant, for example, remains a major hub for Stellantis minivan production, manufacturing the 2027 Chrysler Pacifica, Pacifica Hybrid, and Grand Caravan.
And the Toyota Woodstock West Plant, the newest of Toyota’s three plants in the area, continues to build the popular Toyota RAV4 and RAV4 hybrid crossover utility vehicles. “Those are big sellers and it looks like they’re carrying on with business as usual,” Shouldice says.
Food and Beverage Fills the Void
As the SWO auto industry remains in wait and see mode, Shouldice notes that the food and beverage sector – another backbone of the region’s industrial market – has been generating a fair number of real estate transactions lately.
Black Fly Beverage Co., a maker of alcoholic drinks that was launched in London, just leased an additional 87,000 sq. ft. at 847 Highbury Ave, where it already has three buildings for its manufacturing operations.
And London-HQ’d McCormick Canada, a herbs and spices manufacturer whose brands include French’s and Club House, is also expanding, having added a 150,000 sq. ft. warehouse to its production facilities.
“Food has been the more active segment of industrial real estate as opposed to automotive recently,” says Shouldice. “The future of the industry is really hanging in the balance right now as we see what happens with tariffs and the outcome of the CUSMA renegotiations.”
“That’s when the industry will truly begin to assess what they’re doing moving forward. It feels like everyone here in Southwestern Ontario is anxiously waiting for that moment.”
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