Canada’s trade surplus on vehicles and parts slumped to an annualized $2.7 billion during the first four months of 2003 — the lowest level in more than a decade, the Bank of Nova Scotia says.

“Slowing car and light truck sales in the United States, ongoing losses in market share by the Big Three and a small decline in vehicle production have all contributed to the lower surplus,” says Carlos Gomes, Scotiabank’s auto industry specialist.

“However, most of the deterioration in the nominal trade performance reflects this year’s sharp appreciation of the Canadian dollar,” Gomes said in a release. “Vehicles shipped to the United States — the destination for more than 95% of Canadian exports — are priced in U.S. dollars, significantly reducing export receipts so far this year.”

The drop in Canada’s trade surplus was a sharp contrast to most other industry statistics, which, while moderating, indicate that Canada’s auto sector continues to outperform its much larger U.S. counterpart.

“Productivity at Canadian assembly facilities climbed by 4% last year, boosting Canada’s advantage vis-à-vis operations in the United States to more than 7%, up from 5% two years ago and only a 1% edge in the mid-1990s,” said Gomes.

Canada’s auto parts trade balance also continues to improve, as suppliers gain share in North America. Canada’s long-standing deficit in auto parts has averaged $18.1 billion so far this year, down from a $19.3 billion shortfall in 2002 and a peak of $22.9 billion in 1999. Canadian auto parts exports to the United States have advanced 1% year-over-year through April, at a time when shipments from U.S. and Mexican suppliers edged lower.