Ontario captured vehicle production supremacy in North America in 2004, surpassing Michigan for the first time, according to a report released today by Scotia Economics.

However, growth in the auto sector is set to moderate this year, Scotia Economics says.

According to the Canadian Auto Report, vehicle assemblies in Ontario rose 6% in 2004 to 2.7 million units, compared with a flat performance throughout North America.

While output remained below the 1999 annual peak of 2.9 million units, last year’s production represents a record 16.6% share of overall North American output, marginally ahead of the 16.5% peak in 1999.

In contrast, last year’s 7% decline in vehicle assemblies in Michigan reduced annual output in the state to 2.6 million units from an annual average of three million over the past decade.

“This sharp falloff slashed Michigan’s share of overall North American vehicle production to a record low of 16%,” said Scotia Economics in a release.

The sharp decline in Michigan’s assemblies last year mainly reflects model changeovers, which prompted long shutdowns for retooling.

“Vehicle output in the state is likely to rebound this year alongside startup of a new Ford truck plant and the ramping-up of production of the ’05 Mustang in Flat Rock,” says Carlos Gomes, Scotiabank’s auto industry specialist.

“Vehicle production in Michigan may surpass Ontario’s output once again this year. Annual vehicle assembly capacity in Michigan is currently 3.1 million units compared with Ontario’s 2.8 million.”

Ontario’s vehicle production is off to a slow start this year, with a major build in inventories in late 2004 reducing production schedules – 2% below a year ago through March and double the decline in the United States.

But output will be ramped up in coming months as DaimlerChrysler adds a third shift at Bramalea, Ont., in February, and the CAMI plant in Ingersoll, Ont., starts producing the all-new Pontiac Torrent.

“We expect vehicle production in Ontario to increase by a moderate 2% in 2005,” Gomes said.