Month: February 2026

Canada’s Used Car Market After U.S. Tariff Removal

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What the Tariffs Did And What Comes Next

On February 20, 2026, the U.S. Supreme Court ruled that most emergency tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were illegal (Time Magazine, 2026). Although these tariffs were U.S. policy, Canada’s automotive industry especially the used vehicle market — experienced measurable and lasting effects.

Because North America operates as a deeply integrated auto market, trade disruptions in the U.S. quickly influenced Canadian pricing, supply chains, and consumer behavior.

This article examines what the tariffs did to Canada’s used-car market and what is likely to happen now that they have been removed.

 What the Tariffs Did to Canada’s Used Car Market

Increased Demand for Used Vehicles

Tariff-related uncertainty increased pressure on new vehicle pricing and production planning across North America.

An automotive advisory firm projected that trade-related tariffs could reduce U.S. and Canadian auto sales by approximately 1.8 million vehicles in 2025 (Reuters, 2025).

When new vehicle sales slow:

  • Fewer trade-ins enter the market
  • Fewer lease returns return after 2–3 years
  • Used vehicle inventory tightens

This shift supported stronger demand in Canada’s used car market.

Used Car Prices Remained Elevated Through 2025

National data confirms that used vehicle pricing held firm during the tariff period.

According to Clutch Canada reports:

  • March 2025 average used vehicle price: $33,197 (Clutch Canada, 2025a)
  • Late 2025 average price: $33,718 (+4.6% YoY) (Clutch Canada, 2025b)
  • December 2025 average price: $33,536 (+3.0% YoY) (Clutch Canada, 2025c)

Although minor monthly declines occurred toward the end of the year, annual pricing remained historically elevated.

This reflected:

  • Limited inventory
  • Strong consumer demand
  • High new vehicle pricing

 Wholesale Values Showed Strength

The Canadian Black Book Used Vehicle Retention Index measures wholesale market performance.

In 2025:

  • July 2025: 138.5 points (+2.3% YoY) (Canadian Black Book, 2025a)
  • November 2025: 135.9 points (Canadian Black Book, 2025b)

Although modest normalization began, values remained historically strong.

What Happens Now That Tariffs Are Removed?

If the tariff removal remains in effect and is not replaced by new trade measures, the Canadian used vehicle market is expected to move toward gradual normalization.

Moderate Price Softening Expected

With tariff-related cost pressures easing:

  • Production stability should improve
  • New vehicle supply should normalize
  • Trade-in flow should gradually increase
  • Used inventory should slowly expand

Using December 2025’s average price of $33,536 as a baseline (Clutch Canada, 2025c), a realistic 12–18 month projection suggests:

Scenario Projected Average Price
−3% ~$32,530
−5% ~$31,860
−8% ~$30,850

This represents a potential correction of $1,000 to $2,700 per vehicle.

Inventory Improvement Will Be Gradual

Supply changes occur with a time lag.

0–6 months: Inventory remains tight.
6–18 months: Increased trade-ins and lease returns.
18+ months: Greater market balance.

 Wholesale Market Continues Normalizing

Canadian Black Book reported that wholesale retention declined approximately 7.8% in 2024, indicating early-stage correction (Canadian Black Book & Fitch Ratings, 2025).

With tariff removal:

  • Auction pressure should ease
  • Bidding intensity may cool
  • Acquisition conditions may stabilize

Market Outlook for 2026–2027

Market Factor Expected Direction
Retail used prices −3% to −8% over 12–18 months
Wholesale values Gradual softening
Inventory levels Slow improvement
Market volatility Decreasing
Competition Increasing

Final Takeaway

What the Tariffs Did

  • Supported elevated used vehicle pricing
  • Tightened supply indirectly
  • Maintained strong wholesale retention
  • Reinforced used vehicle demand

What Tariff Removal Is Likely to Do

  • Improve production and trade stability
  • Increase used vehicle supply gradually
  • Ease pricing pressure moderately
  • Restore market balance

Canada’s used car market is expected to move toward controlled normalization through 2026 and 2027, with modest price easing and improved supply stability.

References

Clutch Canada. (2025a, March). Clutch used car pricing report – March 2025.

Clutch Canada. (2025b). Rearview recap: 2025 used car pricing report.

Clutch Canada. (2025c, December). Clutch used car pricing report.

Canadian Black Book. (2025a, July). Used vehicle retention index – July 2025.

Canadian Black Book. (2025b, November). CBB decreases marginally in November.

Canadian Black Book, & Fitch Ratings. (2025). 2025 vehicle depreciation report.

Reuters. (2025, April 7). Tariffs will lead to fewer auto sales in U.S. and Canada, auto advisory firm says.

Time Magazine. (2026, February). Supreme Court strikes down most of Trump’s tariffs.

Demand Outlook for Used Electric Vehicles in Canada: A Measured but Growing Market Overview

Posted on by Admin
Demand Outlook for Used Electric Vehicles in Canada: A Measured but Growing Market
OverviewThe Canadian automotive market is entering a transitional phase for electric vehicles (EVs). While new EV sales have slowed due to policy shifts, reduced incentives, and consumer caution, demand for used electric vehicles is expected to grow gradually over the next 12–18 months. This growth is driven primarily by affordability, increasing used supply, and long-term electrification trends already embedded in the market.

Current Market Conditions

Recent reporting indicates that Canada has stepped back from aggressive EV sales mandates, replacing them with broader fuel-efficiency standards. This change has reduced short-term pressure on consumers to purchase new EVs and has contributed to softer new-vehicle EV demand .

At the same time, global automakers are slowing EV investment and production plans in response to weaker-than-expected demand, signaling a cooling phase for the new EV market rather than a collapse .

However, these headwinds in the new-vehicle segment do not translate directly to the used EV market.

Why Used EV Demand Is Expected to Increase

Despite slower new EV sales, several structural factors support rising interest in used electric vehicles:

1. Growing Used EV Supply
Canada’s EV parc expanded significantly between 2020 and 2024. As early adopters trade in vehicles and leases expire, more EVs are entering the used market, increasing consumer choice and dealer inventory availability .

2. Improved Affordability
High new-vehicle prices and interest rates have pushed many buyers toward used vehicles. Used EVs offer a lower purchase price while still delivering fuel and maintenance cost savings, making them attractive to value-focused consumers .

3. Changing Buyer Profile
Many consumers who are hesitant to commit to a new EV are willing to test the technology through a used purchase. This trend positions used EVs as an entry point rather than a replacement for new EV demand.

Demand Forecast: Short- and Medium-Term

Based on current reporting and market data, the outlook for used EV demand in Canada can be summarized as follows:

Short term (next 12 months):
Demand is expected to increase modestly, with buyers remaining price-sensitive and focused on proven models. Growth will be uneven across regions and strongest where charging infrastructure is more developed.

Medium term (2–5 years):
As EVs reach typical trade-in age (4–7 years), used EV demand is expected to strengthen more noticeably, supported by wider consumer familiarity, improved charging networks, and competitive pricing versus internal combustion vehicles.

Industry analysts broadly agree that the used EV market will expand steadily rather than rapidly, reflecting a normalization phase rather than a speculative surge .

Implications for Used-Car Dealers

For Canadian used-vehicle dealers, this environment presents both opportunity and caution:

Inventory strategy: Focus on high-demand, proven EV models with realistic range and strong reliability records.

Pricing discipline: Increased supply may put downward pressure on prices, requiring careful appraisal and sourcing.

Customer education: Buyers remain concerned about battery life, charging, and winter performance — dealers who can clearly explain ownership costs and usage realities will have an advantage.

Conclusion

While enthusiasm for new EVs has cooled, the used EV segment in Canada is positioned for gradual growth, supported by affordability, expanding supply, and long-term electrification trends already in motion. For used-car dealers, success in this segment will depend less on volume expansion and more on selective inventory, accurate pricing, and informed sales practices.

References

  1. Reuters Canada expected to scrap EV mandate in favor of new fuel-efficiency system (February 2026).

  2. Reuters  Another climate retreat: Canada scraps EV sales mandate (February 2026).

  3. Reuters  Automakers scale back EV investments as demand softens (February 2026).

  4. Canadian Energy Regulator (CER)  Zero-emission vehicles account for over 10% of new vehicle registrations in Canada (Market Snapshot, 2024).

  5. AutoTrader Canada  Interest in EVs is dropping, but affordability drives used EV consideration (2024–2025 market analysis).

  6. Canadian Auto Dealer Magazine  Used vehicle market trends and electrified vehicle adoption (2025–2026).