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Home > Knowledge Base > Automotive Glossary

Automotive Glossary


Aftermarket (Replacement Market)

all products and services used in the repair and maintenance of vehicles.

Aftermarket part

goods not for use as original equipment in the production of light-duty vehicles or heavy-duty vehicles, ie. products and services used in the repair and maintenance of these vehicles.

Agent or broker

an intermediary with legal authority to operate on behalf of the manufacturer.

American Automobile Labelling Act (AALA)

regulations requiring vehicle manufacturers to include content information on vehicle labels for cars and trucks for sale in the U.S. after October 1, 1994.

Anti-lock braking system (ABS)

System that automatically controls wheel slip or prevents sustained wheel-locking on braking.

Asia Pacific Economic Cooperation (APEC)

An organization established in 1989 to promote trade and investment in the Pacific Basin. APEC now comprises eighteen countries located in and around the Pacific Ocean: Australia, Brunei, Canada, Chile, China, Hong Kong, Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, the Phillippines, Sinapore, South Korea, Taiwan, Thailand, and the United States.

Association of South East Asian Nations (ASEAN)

an organization of states (including Brunei, Myanmar, Burma, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam) founded in 1967 to present an united front that addresses the political, economic, and strategic dynamics of the region.

Auto Pact base year

With respect to the Auto Pact, the 12 month period beginning on August 1, 1963, and ending on July 31, 1964.

Auto Pact Canadian value added

the aggregate of the costs of parts, material, labour costs, and transportation costs that are reasonably attributed to the production of vehicles or parts by manufacturers producing vehicles in Canada.

Automated Guided Vehicle System (AGVS)

vehicles equipped with automatic guidance equipment which follow a prescribed path, stopping at each machining or assembly station for manual loading and unloading of parts.

Autodealership or auto dealer

a retail outlet that carries one (or in some cases in the U.S., a number of) manufacturer's product line and sells to general consumers and fleet operators. The outlet will also provide service and sell parts for the brand of vehicle that it carries. In some instances, a dealer may dual for another manufacturer's product line.


four-wheeled passenger motor vehicle having a seating capacity for not more than 10 people including police cars and racing cars but not including ambulances or hearses.

Auto parts store

jobber and retail auto parts stores which primarily sell automotive products and conduct business at the retail level.

Average weekly earnings

gross taxable payrolls divided by the number of employees.

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Big Three

General Motors, Ford and Chrysler.

Body shop

service outlet specializing in vehicle body repair work.


passenger motor vehicle or chassis having a seating capacity for more than 10 people.

Buying decisions

the act of determining whether or not a product purchase or repair, will be made, and/or which product or service will be purchased.

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Canada-U.S. Free Trade Agreement (FTA)

Implemented in January 1989 to elimiate all tariffs on U.S. and Canadian goods by January 1998 and to reduce or eliminate many non-tariff barriers.

Canadian Automotive Repair and Service Council (CARS)

a not-for-profit organization established to serve the human resource and training needs of the Canadian car and truck repair and service industry.

Canadian cross border shopping

cross border shopping describes the purchasing by Canadian consumers of products in the United States. Of particular interest is the decision by these buyers to obtain their products in the U.S., even though similar products are available in the Canadian market.

Canadian Environmental Protection Act (CEPA)

act where the goal is pollution prevention and protection of Canadians from toxic substances.


maximum production attainable under normal conditions. With regard to normal conditions, the company's operating practices are to be followed with respect to the use of production facilities, overtime, workshifts, holidays, etc.

Capital Expenditures

expenditures to acquire or add to capital assets that will yield benefits over several accounting periods. Included are cost of procuring, construction, installing new durable plants, machinery and equipment where for replacement, addition or for lease or rent to other companies including subsidies.

Captive Import

an imported motor vehicle or part manufactured by another automaker usually for sale under the brand name of the importer.


a process technology that delivers a liquid molten metal into a purpose-built mould. After cooling, the solid metal surface has the shape of the mould cavity.

Census value added

residual representing the difference between the value of goods and industrial services produced and the direct material costs associated with the production of goods.


the refitting of equipment to either neutralize the effects of the just completed production or to prepare equipment for production of the next scheduled item, or both.

Climate Change

the international concern that increasing concentrations of greenhouse gases (GHGs) in the atmosphere are changing the climate in ways deterimental to our social and economic well-being.


a raw material, ingredient, part or subassembly that goes into a higher level assembly, compound, or other item.

Component assembly

a combination of two or more parts or sub-components to form an assembly.

Component Design

the activity for the fesign of specific components including responsibility for material, cost, weight, reliability, durability, fuction, appearance, serviceability.

Concept Vehicle

a current production vehicle modified for installation of new design concepts for evaluation of environmental functional feasibility.

Consumer factors

demographic characteristics of consumers including age, gender, income and geographic location, affordability.

Corporate Average Fuel Economy (CAFE)

regulation enacted in 1975 which requires a motor vehicle manufacturer to classify its U.S. vehicle fleet sales as either domestic or import for the purpose of fuel economy averaging.

Cost of production

actual cost to the manufacturer of producing a vehicle (does not include mark-up).

Customs duties

customs duties levied on imported goods under the Customs Tariff.

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Days' Supply

number of days needed to sell all vehicles in inventory, based on the previous month's sales rate.


a firm that buys and sells, adding some value for the consumer in the process. Dealer often means a firm which operates closer in the distribution channel to the consumer than a distributor or wholesaler, and may add more value for consumers than either of the above-mentioned terms.

Dealer principal

the individual or corporation that owns and controls one or a number of auto dealerships.


solid or hollow form used for shaping materials by stamping, pressing, extruding, drawing or threading.


the way in which innovations spread through market or non-market channels.


synonymous with wholesalers; distributors perform many of the same functions as wholesalers, such as selling, physical distribution, credit, etc. Some industries use the term distributor instead of wholesaler.

Distribution channel

is the path goods take as their title transfers from producer to consumer. The title transfer for consumer goods is usually accompanied by transfer of the physical goods, as well.

Do-it-Yourself Market (DIY)

the vehicle maintenance and repairs conducted by the vehicle owner or friend/relative who purchase auto parts from a retail outlet.


a vehicle produced in Canada, United States or Mexico.

Door rates

the hourly rates charged by dealers on standardized units of service work. Hourly rates may or may not correspond to an actual hour of work.

Duty drawback

import duties or taxes repaid by a government in whole or in part, when the imported goods are re-exported or used in the manufacture of exported goods.

Duty paid value

in respect to imported goods, is the aggregate value for duty on imported goods.

Duty waiver

forgiveness, in whole or in part, of import duties when certain conditions are met.

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Electric Vehicle

cars, buses, vans or trucks which use dedicated or hybrid electric systems as their power source.


total employment in each manufacturing facility, including total manufacturing employees, total support staff, and total engineering/R&D staff.
Average number of workers employed by an establishment during the year. Production workers relate to the average number actually engaged in the manufacturing process. Administrative and non-manufacturing includes employees at head offices and sales offices.

Employee Benefits

the provision of direct (salary, bonuses, etc.) indirect (vacation leave, medical and dental plans, etc.) and deferred employee compensation (pensions, etc.).


smallest operating entity producing a homogenous set of goods and services and is capable of reporting full range of production account variables to calculate "value­added".

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Free Trade Agreement of the Americas (FTAA)

an effort to unite the economies of the Western Hemisphere into a single free trade arrangement. The Heads of State of the 34 democracies in the region agreed to construct a "Free Trade Area of the Americas" and to complete negotiations for the agreement by 2005.

Finance & control

ownership of company (ie. Canadian, U.S., Japanese, German, etc.); public or private; capital investments: buildings, machinery and equipment, tooling programs.


a business or institution comprising sole proprietorships, partnerships, companies and other forms of organizations.

Fixed or One Price Selling

published fixed price displayed on a new vehicle eliminating need for negotiation.


device for holding goods in process while working tools are in operation that does not contain any special arrangements for guiding the working tools.

Fleet sales

the purchase of vehicles by a business that meet a minimum requirement of units sold.


prediction of future production or sales in the automotive industry.


a process that transforms solid metal into shapes of varying cross-sectional material thickness, often involving heating.


establishment that has the right to exercise the powers of a corporation.

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G7 (Group of Seven)

seven industrial countries consisting of the United States, Japan, Germany, France, the United Kingdom, Italy and Canada, whose leaders have met at annual economic summits since 1975 to coordinate economic policies.

General Agreement on Tariffs and Trade (GATT)

Signed in 1947, the GATT was a formal multilateral agreement aimed at expanding and liberalizing world trade. The World Trade Organization which is the successor to the GATT came into existence on January 1, 1995.

Generalized Preferential Tariff (GPT)

system of non-reciprocal tariff prferences for the benefit of developing countries. It grants duty-free or preferential entry to imports for elegible developing countries up to a certain dollar value or import percentage limit.

Greenhouse gases (GHGs)

group of gases which individually act to trap solar energy near the earth. GHGs for which emission levels have been estimated are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), carbon tetrafluoride (CF4), carbon hexafluoride (C2F6) and hydrofluorocarbons (HFCs).

Grey market

the grey market describes the purchase by intermediaries of product which is not supplied to them by the "authorized" distribution channel of the supplier. Thus, a warehouse club in Canada that sells a stereo bought in the U.S. or elsewhere from other than the manufacturer is supplying grey market goods. While grey market products are frequently the same as would be available from conventional channels in Canada, the grey market assumes responsibility for service or repair where the manufacturer declines this support.

Gross Vehicle Weight (GVW)

Maximum legal weight at which a vehicle can be operated.

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Heavy-duty truck

vehicle weighing from 26,001 to 33,001 lbs. Also included off-highway trucks.

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Ignition System

Electrical system devised to produce timed sparks from engine spark plugs. Consisting of a battery, induction coil, capacitor, distributor, spark plugs and relevant switches and wiring.


an organization that typically operates at arms length or under contractual agreement with manufacturers to bring products made in another country into Canada.

Import Nameplate

vehicles sold by manufacturers primarily located outside North America whether assembled Overseas or in North America.

Independent Repair Shop

small service outlet offering specialized repair services. They usually do not sell gasoline.

Intellectual Property Rights (IPR)

the right to possess or control the use of intellectual property, such as trademarks, copyrights, patents and trade secrets.

Interchannel competition

rivalry between different channels of the distribution system. For example, independent retailers competing with manufacturers' outlets.


firm or organization that operates between the producer of the goods and the end purchaser. Thus, the members of the distribution channel noted above are intermediaries or "middlemen".

Intrachannel competition

rivalry between channel participants at the same level in the distribution channel. For example, department stores competing with one another.


book value of inventory owned and held in Canada.

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device used in the accurate machining of good in process by holding the goods firmly and guiding tools exactly to position.

Joint Venture

an international business collaboration between foreigh interests and private parties from a host country in which two or more parties establish a new business enterprise to which each contributes and where ownership and control are shared.

Just-in-Time (JIT)

refers to the movement of material to the necessary place at the necessary time. It is part of a business philosophy based on achieving excellence in a manufacturing company through the continuous elimination of waste.

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Kaizen Activities

activity through which continuous improvement is sought.

Kyoto Protocol

international agreement among industrialized countries to reduce greenhouse gas emissions negotiated in Kyoto, Japan in December 1997. Canada committed to reduce its greenhouse gas emissions by 6 percent of 1990 levels between 2008 and 2012.

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form of contract transferring the use of a vehicle in consideration of payment.

Light truck

vehicle weighing less than 14,000 lbs.

Light vehicles

passenger cars and light trucks.

Loss Leaders

Products whose prices are cut with the idea that they will attract customers to the store.

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brand name of a car or truck (ie. Chevrolet, Ford, Dodge, Honda).

Manufacturer's Suggested Retail Price (MSRP)

Dealers typically sell at a discount to this price.


an operation which shapes metal parts by carving away excess material as chips produced in a sequential process of turning, milling and grinding operations.


process technology (ie. metal forming, machining, injection moulding, blow moulding, die casting, forgings, electronics/electrical, assembly, coating/plating); capacity utilization (in percent); production volumes; strategic alliances (eg. joint ventures, technology agreements).

Margin or gross margin

the return an intermediary achieves on the selling price of the article. That is, if the intermediary buys a product for $1 and sells it for $1.50, the margin is calculated. For example, .50 divided by $1.50, or 33%.

Market share

The percentage of total sales represented by an individual manufacturer/importer, make or nameplate.


the return an intermediary achieves on the cost price of an article. Using the same example described above, mark-up is .50 divided by $1, or 50%.

Maquila (maquiladora)

Mexican assembly plant located near the U.S.-Mexican border where most production is exported to the United States.

Mechanic installed market (MIL)

vehicle maintenance and repair conducted by a mechanic/professional at a service outlet.

Medium-duty truck

vehicle weighing from 14,001 to 26,000 lbs.


the southern cone common market of Argentina, Brazil, Paraguay, and Uruguay. Mercosur enacted a common external tariff on January 1, 1995 for almost 85 percent of tariff items of the four countries; most trade among members will be duty-free.

Metal forming

solid metal and molten metal process such as casting, forging, stamping and machining.

Methylcyclopentadienyl Manganese Tricarbonyl (MML)

MMT is an organic manganese compound. It is used as a fuel additive designed to enhance octane levels in gasoline.

Model line

group of motor vehicles having the same platform or model name.

Model name

word, group of words, letter, number or similar designation assigned to a motor vehicle by a marketing division of a motor vehicle assembler.

Most-Favoured-Nation (MFN) Treatment

one country's commitment to extend to another ocuntry the lowest tariff rates that it applies to any third country.

Motor Vehicle Saftey Act (MVSA)

Act which regulates the manufacture and importation of motor vehicles and motor vehile equipment to reduce risk of death, injury and damage to property and the environment.


hollow form, matrix or cavity into which materials are placed to produce goods of desired shapes.

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Net sales value

the selling price received by the manufacturer for the vehicle including the cost of transporting the vehicle in Canada (includes mark-up).

New car dealer

major car dealership with a parts and service operation.

North American Free Trade Agreement (NAFTA)

Agreement creating free trade amone the United States, Canada, and Mexico. The NAFTA went into effect on January 1, 1994.

North American Industrial Classification System (NAICS)

Industry Classification between Canada, the United States and Mexico to increase compatibility of data with these countries. The classification is based on establishment rather than commodity. This classification system will be implemented with reference to year 1997 and data will be available in 1999.

North American produced

motor vehicles assembled in Canada, the United States or Mexico.

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Off-Highway Vehicle

Vehicle intended for operation on unmade surfaces or rough terrain (i.e. for construction or agriculture).

On Board Diagnostics (OBD)

a unit that monitors the Electric Control Unit and system responses for errors during normal vehicle operations. When the vehicle is serviced, this information on the errors can be down loaded and displayed to the service personnel which will facilitate the trouble shooting process.

Operating profit

pre-tax earnings after deducting all operating expenses from gross margin.

Organization for Economic Co-operation and Development (OECD)

an organization whose purpose is to provide its 29 Member countries with a forum in which governments can compare their experiences, discuss the problems they share and seek solutions which can then be applied within their own national contexts. Each member country is committed to the principles of the market economy and pluralistic democracy.


synonymous with vehicle dealership.


the situation where maximum global prodution of automobiles exceeds the total global demand for automobiles.


includes pay received for the number of hours worked in excess of the standard workday or workweek.

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Partnership for a New Generation of Vehicles (PNGV)

established in 1993, this partnership, between the United States Federal Government and the Automotive industry, was founded to establish global technical leadership in the development and production of affordable, fuel-efficient, low emission vehicles that meet today's performance standards.

Passenger vehicle

four wheeled motor vehicle that also includes mini-vans and sport utility vehicles.

Plastic moulding

a process that converts organic-based materials, by means of a general-purpose press and purpose-built tooling under controlled heat and pressure, and injects the hot material into a die cavity shaped in the final form of the intended part.


primary load-bearing structural assembly of a motor vehicle determining the basic size of the motor vehicle, and is the structural base that supports the driveline and links the suspension components of the motor vehicle.

Pneumatic Tire

Flexible, hollow rubber forming the outer part of the vehicle wheel and inflated by air pressure.

Product design

the process of planning the product's specifications.

Product planning

a function whereby an enterprise is responsible for the efficient, planning, scheduling and coordination of production activities.

Product testing

rigorous methods whereby a product's quality and durability are measured.

Production engineering

planning and control of the mechanical means of changing the shape, condition of materials toward greater effectiveness and value.


relative measure of output per labour and/or machine output.

Program cars

automobiles sold by manufacturers for fleet use. Usually applies to very large fleets, such as those of car rental companies.

Program Objectives

A consensus of what has been determined to be the most marketable product for a given model year.


total materials purchased for manufacturing/assembly into auto parts (ie. steel, plastics, rubber, textiles, etc.).

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quick die change.


conformance to requirements in relation to a degree of excellence.

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closure of a plant for the purpose of plant conversion or retooling.


motor vehicle ownership that is filed with the province/state.

Research & development

R&D expenditures (product and process development).

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Society of Automotive Engineers.


total automotive product sales (vehicles, automotive parts, including OE and aftermarket).

Scientific Research and Experimental Development (SR&ED) Program

this program provides generous incentives for industrial research and development in Canada. The program allows individuals and companies to deduct 100 percent of qualified current SR and ED expenditures and capital SR and ED expenditures.


a vehicle registered in the previous year but not re-registered in the current year.

Service station

outlets which sell gasoline and are operated by the major oil companies.

Shipments (value of)

summation of value of shipments produced by establishment, receipts of custom and repair revenue.

Special Import Measures Act (SIMA)

helps to protect Canadian producers from harm or injury caused by the dumping of goods into Canada by foreign exporters or the subsidizing of goods by foreign governments.

Special services

a category that describes plants which add value to automotive parts manufactured by others by using process such as painting, plating, heat treatment, etc.

Specialty repair shop

retail outlet which offers specialized vehicle products and service.


Sports Utility Vehicle.


a process technology which manufactures automotive parts by shaping rolled sheet metal or by bending or stretching it in a sequence of purpose-built tools fitted to a general purpose press.

Standard Industrial Classification (SIC)

industry class that represents a level of organization of production by type of specialization. Currently the 1980 Standard Industrial Classification is in effect identifying each industry at the 4 digit level.

Standard Work Week

average number of hours worked normally scheduled in a work week.


a subsidiary is an organization operating in Canada that is owned or controlled by a foreign company which may or may not manufacture in Canada.

Supplier Cost Reduction Effort (SCORE)

a United States program that urges suppliers to develop processes to cut costs. Suppliers are allowed to keep half the savings and pass on the other half to the automakers.

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A duty or tax imposed on imports.

Tier 1 Supplier

manufacturer to the vehicle assemblers who are responsible for delivery of the finished assembly, product development and continued technology renewal.

Tier 2 Supplier

producer of parts providing value-added to minor sub-assembly.

Tier 3 Supplier

supplier of engineered materials and special services, such as rolls of sheet steel, bars and heat treating, surface treatments.

Tire store

retail outlet selling tires and offering vehicle repair services.

Total Quality Management (TQM)

A management technique to improve the quality of goods and services, reduce operating costs and increase customer satisfaction.


device for use in, or attachment to, production machinery that is for the assembling of materials or the working of materials by turning, milling, grinding, polishing, drilling, punching, boring, shaping, shearing, pressing or planing.


set of required standard or special tools needed to produce a particular part; includes jigs, fixtures, gages and cutting tools, but excluding machined tools.

Trim Level

vehicle designation assigned by vehicle manufacturers that represent specific equipment packages.

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United States Council for Automotive Research (USCAR)

an organization founded by Chrysler, Ford, and General Motors to strengthen the technology base of the domestic automotive industry through research and co-operation.

Used vehicle

vehicle that has been previously owned or driven.

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Value analysis.


Value engineering.


Voluntary export restraint in relation to Japanese manufacturers exporting to Canada (no longer in effect).


Voluntary restraint agreement in relation to Japanese manufacturers exporting to the United States (no longer in effect).

Vehicle Identification Umber (VIN)

Number assigned to a vehicle by the manufacturer primarily for registration and identification purposes (consisting of numerals and letters).

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Windsor Experiment

Chrysler Canada, in partnership with government and educational institutions, has launched a number of initiatives collectively referred to as the Windsor Experiment. The Windsor Experiment conducts studies to benchmark "best practice" training and education in Europe, and applied the results in various skills development programs.


an intermediary which sells to other intermediaries, such as a firm that buys from a manufacturer and sells to a retailer.

World Trade Organization (WTO)

Created by the Uruguay Round and successor to the GATT, this new organization began operations on January 1, 1995.

Source : Canadian Automotive Industry


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