Stability reigns in the Canadian wholesale used-vehicle market.

While the threat of tariffs and a trade war with the U.S. loom on the horizon, the week ending Feb. 22 looked a lot like the previous few: a mild downward drift of 0.22% overall and solid auction sales rates, according to Canadian Black Book’s weekly Market Insights.

The pace of the decline did pick up a bit after losses of less than 0.20% in six of the past seven weeks, with truck/SUV segment values down 0.21% and cars dropping 0.23%.

Compact vans took the largest percentage fall at 0.95% ($184), followed in the truck/SUV category by mid-size crossover/SUVs (0.60%, $225), small pickups (0.49%, $135) and sub-compact luxury crossovers (0.45%, $96).

Among cars, full-size cars were down 0.66% ($133), sub-compact cars dropped 0.55% ($54) and compact cars fell 0.42% ($58). Prestige luxury cars ($232, 0.40%) and premium sporty cars ($159, 0.20%) took the biggest dollar losses.

Only two segments gained value for the week: mid-size crossover/SUVs (up 0.29%, $69) and compact crossover/SUVs (0.11%, $19).

Monitored auction sale rates were steady, averaging 49.3% with a range from 39.5% to 70.1%, and retail prices continued to sink, with the 14-day moving average retail listing price for used vehicles down to $34,000.

The U.S. market remained on course, showing the expected seasonal behavior. Late-model vehicles aged 0-to-2 years neared positive territory after a minimal decline of 0.08% for the week, and high-volume segments like compact cars (up 0.02%) and compact crossovers (up 0.002%) recorded small gains. The overall market was down 0.19%.

Canadian Wholesale Market Stable as tariffs loom. Auto Remarketing. (n.d.). https://www.autoremarketing.com/arcanada/canadian-wholesale-market-stable-as-tariffs-loom/

In a car market where consumers are extremely sensitive to prices, the addition of a 25 per cent universal export tariff could have a distorting effect, according to an auto sector analyst.

U.S. President Donald Trump has threatened to slap Canada and Mexico with such a tariff as early as Saturday.

“If that happens, expect to see some changes in the market for sure,” said Baris Akyurek, AutoTrader’s vice-president of insights and intelligence. AutoTrader is Canada’s largest online automotive marketplace for new and used cars.

“Demand will shift from new to used with the significant price increases that tariffs would likely bring. We think of the two separately, but they really go hand-in-hand.”

With new car prices expected to climb and consumers’ car-buying strategies expected to change, Akyurek said the used car market will also see rising prices as demand increases.

Though he doesn’t expect used vehicle prices will skyrocket, as they did during COVID, the principles of supply and demand remain in play.

“Right now the used inventory is healthy, but it isn’t as big as it was a year ago,” Akyurek said.

“We’re starting to see the impact of the loss of production during the pandemic. Tariffs will also push consumers to look more to the used car market when supply is becoming tighter.”

That shift in consumer focus will have a ripple effect on new car sales.

Unlike during COVID, when supply chain shortages significantly reduced the volume of new car production, it will be tariff-inflated prices that will force a reduced demand.

He said some manufacturers (OEMs) may offer incentives, much like Hyundai and General Motors did recently for Canadian electric car buyers who got caught by the sudden elimination of the $5,000 federal EV incentive.

“I think a few OEMs will do something, like incentives or interest rate reductions, in the short term,” Akyurek said.

“That won’t be a long-term solution. That won’t make sense on the balance sheet.”

Consumers may also alter their perception of what automakers they consider domestic manufacturers, or make a political point with their purchases, Akyurek added.

Toyota and Honda both have substantial assembly operations in Ontario and rank first and third in Canada in vehicle production. Ford in the nation’s No. 2 vehicle manufacturer.

Stellantis remains the largest employer of automotive workers in Canada and is expected to add a third shift later this year at its Windsor Assembly Plant.

Akyurek said Auto Traders’ research has found consumers’ brand loyalty isn’t strong and buyers are willing to look at other options.

“I think it would (be a possibility),” said Akyurek of shifting perceptions if consumers are assured of the vehicle’s domestic content and see that it results in price savings.

“Since the last few years, the auto market is a bit more amalgamated and distinctions are less obvious.”

However, the highly integrated auto industry is going to make it difficult to avoid tariffs entirely. Parts can cross the border with the U.S. or Mexico up to eight or nine times before final assembly.

More than 90 per cent of Canadian manufactured vehicles and automotive parts are shipped to the U.S.

The new 25-per-cent tax could be multiplied should a tariff be applied with each entry into the U.S., and the dollar value of the tariff will also increase as the piece gains value as part of a larger, value-added assembled product.

“It’s hard to know how long it’ll take for the tariffs to work through the system or how much prices will increase,” Akyurek said. “We think the increase will be significant.”

The timing of a tariff war couldn’t come at a worse time for the Canadian auto industry.

After dipping to a low of 1.1. million vehicles manufactured in Canada in 2021, DesRosier Automotive Consultants reported Canadian sales of 1.86 million light vehicles in 2024, about 180,000 units shy of the record high set in 2017.

“After a few tough years, things were starting to normalize,” Akyurek said. “Now, there’s a lot of uncertainty and unease about the market.”

 

Wadell, D. (2025, January 30). Expect U.S. tariffs to spur demand for used cars — auto analyst | Windsor Star. Windsor Star. https://windsorstar.com/news/local-news/expect-u-s-tariffs-to-spur-demand-for-used-cars-auto-analyst

There’s some disagreement about the forecast for Canada’s retail used market in 2025. But analysts agree on one thing: it’s hard to know exactly what retail used-car demand and pricing is going to look like this year.

“Assuming there are no changes in the market we expect to see a growth in the used-car market in 2025,” Baris Akyurek, vice president, insights & intelligence at AutoTrader.ca, told Auto Remarketing Canada.

However, changes are very likely. “Uncertainty is the high-level theme” of Canada’s used-car industry this year, Akyurek said.

In 2024, a return of new-car supply had a deflationary impact on used-car prices, with prices declining by 12.1% compared to the previous year, according to AutoTrader.ca.

That price correction was a delayed impact to “a lot” of price correction on the wholesale side, Daniel Ross, senior manager industry insights & residual value strategy at Canadian Black Book, told Auto Remarketing Canada.

CBB saw a 12 to 14% retail used price correction in the second half of 2024.

“With new-car volume returning, that helped the used market value price correction,” he said.

CBB sees used-car demand falling in 2025 but doesn’t expect much market turbulence. There is “probably a little more stability as a whole” in the used market this year, Ross said.

The increase in new-car supply in 2024 pulled some consumers from the used to the new market, Robert Karwel, director, customer success at J.D. Power PIN Canada told Auto Remarketing Canada.

Canada saw the highest volume of new car sales in 2024 since 2019, he said. New-car supply will remain abundant in 2025, he said.

“With more supply of new and stubbornly high (Average Percentage Rate) for used, I think the used-car market is going to be challenging,” Karwel said.

Leasing trough hits to hit used supply

Leasing is a primary source of used inventory for dealers. In Canada, 48 months is the most prevalent lease term. Leasing hit a low of 18% between 2021 and 2022, according to CBB.

That will drag down used supply in 2025. CBB forecasts used-car supply in 2025 to decline 3% annually to 1.57 million units and continue to fall in 2026 and 2027, bottoming out at 1.54 million units before rebounding to 1.65 million in 2028.

The lack of off-lease vehicles will hit the certified pre-owned market especially hard, J.D Power’s Karwel said. That may boost CPO prices but “the expected supply of new cars is still forecast to increase in 2025, which means we expect new-car pricing to be slightly deflationary” to the used market,” he said.

“2025 is going to be a real crossroad for used cars in Canada,” Karwel said.

Interest rate cuts not much help to used

Interest rates are another wild card impacting Canada’s 2025 retail used market.

The Bank of Canada began cutting interest rates in 2024 and rate cuts are expected to continue, which in general is good news for both new and used customers, Akyurek said.

But that hasn’t had a large impact on used-car loans, Karwel said. “We have barely seen any APR reduction (in the used market,” he said. “There is deal making on the new side but not on the used-car side.”

Then there’s the politics factor

Another huge wild card in forecasting Canada’s 2025 retail used market is the situation around U.S. President Trump’s tariffs on imports from Canada — which remains fluid

Prior to the tariffs being officially announced and subsequentially delayed, CBB’s Ross had predicted a “healthier used-car market from the retail side” in 2025 with a caveat: “15 to 20% of the market is shipped to the U.S.,” he said. “That may change if tariffs are imposed. That could curtail a lot of demand (and) it could bring down prices.”

Tariffs would also hit Canada’s overall economic growth, Akyurek said before they were announced. Some 76% of Canada’s manufacturing — including autos — goes to the U.S., he said.

Tariffs would reduce demand in the U.S. for Canadian goods and “if demand declines to the U.S., our economy will suffer, including automotive,” he said.
But “in terms of quantifying what the impact would be, I don’t think anyone knows,” Akyurek said.

Uncertainty rules outlook for Canada’s 2025 retail used-car market. Auto Remarketing. (n.d.). https://www.autoremarketing.com/arcanada/uncertainty-rules-outlook-for-canadas-2025-retail-used-car-market/

This week Canadian Black Book released data showing the used wholesale market experienced a decline of -0.05% in pricing for the reporting period that ended on Saturday. Last week that decline was -0.10%, while the 2017-2019 average for the same period was -0.28%.

Car segment prices decreased by -0.09%, which is -0.10% less than the prior week. And truck/SUV segments were flat at -0.00%, similar to the previous week. The largest declines in the car segments came from luxury cars and sub-compact cars, and for trucks/SUVs it was Minivans and full-size pickups.

“None of the market segments experienced an average value change of more than ±$100,” said CBB in its update. “The change in truck segments fell by 1%, bringing the overall change at steady 0%. While the decline of the car segments decreased by 10%, bringing its change to -0.09%.”

They added that there has been a continuous fluctuation in sale rates across several auction lanes stemming from factors that include the ongoing gradual decline or change in floor prices, and recent adjustments to interest rates.

In the car category, CBB said the segments with the slightest increase were sports cars (+0.03%), and premium sports cars (+0.01%). The largest decreases came from luxury cars (-0.29%), sub-compact cars (-0.21%), and mid-size cars (-0.19%).

For trucks/SUVs, eight segments saw a decline in values — the ones with the largest declines being minivans (-0.30%), full-size pickups (-0.24%), and compact vans (-0.17%). However, five segments also saw values spike, including mid-size crossovers/SUVs (+0.34%) and compact crossovers/SUVs (+0.18%).

In the United States, CBB said the market continued to be stable based on last week’s data, with depreciation following a normal seasonal pattern. “However, the main focus is now on the effects of tariffs on the automotive industry” should the tariffs come into effect after the 30-day pause.

Lefko, P., dealer, C. auto, dealer, C. auto, Phillips, T., & Lefko, P. (2025, February 6). Used vehicle pricing declines less, market untouched by tariffs. Canadian Auto Dealer. https://canadianautodealer.ca/2025/02/used-vehicle-pricing-declines-less-market-untouched-by-tariffs/