Ford Canada's chief executive said the country's auto industry will face "challenges" over the next few years, forecasting that it will grow by only a few per cent annually starting in 2011.

"First and foremost, the auto industry has to pick up," David Mondragon told CTV News Channel Thursday afternoon from downtown Toronto.

While he said he expects the industry north of the border will grow by 7 per cent this year, it will likely expand by only 2 per cent in 2011 and 2012.

"That's a point less than the GDP growth next year," Mondragon said. "So there's still going to be some challenges."

Ford and General Motors have been competing to clinch top position in the Canadian auto market, while Toyota has been working to reclaim customers rattled by a string of high-profile recalls.

Automakers have been offering incentives to customers, including Ford, which is prolonging price incentives for its employees until the end of the month.

"We feel good about where we're at, and we feel good about the future. But the economy is still in question -- it's shown great signs of moderation over the last three months," Mondragon said.

Ford Canada has about 6,000 employees at facilities in Oakville, Ont., St. Thomas, Windsor, Brampton, Ont., and Edmonton.

But it is expected to trim about 400 workers in coming months when the firm drops one of two shifts at its Windsor Engine Complex. In addition, Ford Canada plans to shut its St. Thomas, Ont., plant in 2010, making another 1,500 employees jobless.

To get through the recession, Mondragon said the company has been making "very difficult decisions."

"We closed 28 plants over the last few years, globally, we let go 120,000 employees," he said.

Mondragon spoke to CTV News Channel hours after he spoke at a business luncheon in downtown Toronto, where he said the company expects gas prices to climb back beyond the US$100 per barrel mark "in the not too distant future."

In anticipation of that, Mondragon said that by 2011, 60 per cent of the company's offering will consist of cars and crossovers, rather than less fuel efficient vehicles such as trucks.

With files from The Canadian Press