The world's auto makers announced $14.7-billion worth of new vehicle assembly investments in the first six months of 2004, but none of the money will be spent in Canada or the United States as auto companies instead pump billions into China and Eastern Europe.

That's the key conclusion of a semi-annual study done for the Automotive Parts Manufacturers Association of Canada that examines trends in vehicle assembly and production.

Auto makers unveiled $7.4-billion worth of new investments in China during the period, compared with $3.2-billion in the same period a year earlier. They will pump another $2.8-billion into Eastern Europe, compared with $1.4-billion in the first half of 2003.

Those trends don't indicate that investments in Canada and the United States have dried up, said Anthony Faria, director of the Office of Automotive Research and Training at the University of Windsor, who did the study.

"Canada has a good environment for the auto industry," Mr. Faria said.

"But it just hasn't really jumped with both feet into the incentive battle."

Auto makers are concentrating on emerging markets, said Michael Robinet, vice-president of global forecast services for consulting firm CSM Worldwide Inc. of Northville, Mich.

Besides the obvious growth in China, such countries as India, Thailand, Turkey and some Eastern European nations are moving to the forefront, Mr. Robinet said.

"Their domestic economies are growing and those emerging markets are not building the 10-year-old junk they used to," he said.

Instead of assembling vehicles using old tooling and production capability cast off by North America and Europe, auto makers in emerging markets are designing vehicles specifically for those markets or integrating them into so-called global platforms that will service several countries.

It's hardly lights out for North America, Mr. Robinet agreed, but "that next wave of new capacity won't come along until the 2008-2009 time frame."

The pause in investment here comes after eight years of heavy spending -- $76-billion (U.S.) in the past eight years, by Mr. Faria's count -- that have helped turn the U.S. South into an auto assembly powerhouse.

Most of that investment came from Europe and Asia-based auto makers such as the Mercedes-Benz division of DaimlerChrysler AG, Honda Motor Co. Ltd., Toyota Motor Corp. and others.

Toyota, Hyundai Motor Co. and Nissan Motor Co. Ltd. are considering building new assembly plants in North America, he added.

Mr. Robinet said Honda could be looking to increase capacity toward the end of the decade as well.

Canada could be in contention for some of those projects, he said, but governments need to address such issues as the transportation problems at the Windsor-Detroit border crossings.

Incentives are also a crucial issue, he said.

Government financial help for redevelopment projects that Ford Motor Co. and General Motors Corp. are planning in Ontario should signal to other auto makers that Canada is prepared to jump into the incentive game, Mr. Robinet said, but "you're competing more and more with some hungry U.S. states."