What Every Used Car Dealer in Ontario Needs to Know, March 2026

Published by Ontario Underwriters | Auto Finance, Southern Ontario

If you operate a used car dealership in Southern Ontario, whether you’re in the Greater Toronto Area, Hamilton, Mississauga, Brampton, London, Kitchener-Waterloo, Barrie, or the Niagara Region, the market conditions right now are working in your favour. New vehicle prices have broken records, trade policy is rattling automakers, and buyers are flowing toward used car lots. But only dealerships with fast, reliable financing partners are capturing those sales.

Here is what is happening in the Canadian auto market this spring, and why your dealership’s financing setup may be the most important competitive advantage you have.

Tariffs Are Driving Canadian Buyers to Used Car Lots in Ontario

Canada’s auto industry is navigating one of its most turbulent trade environments in decades. The wave of U.S.-Canada tariffs introduced throughout 2024 and 2025 have had a lasting, measurable effect on vehicle pricing and used car dealers across Southern Ontario are positioned to benefit.

The average new vehicle in Canada now costs over $63,000, a price point that excludes a wide and growing segment of Ontario’s population. According to AutoTrader Canada and reporting in The Globe and Mail, tariffs added approximately $830 to the average used vehicle price in 2025 meaning that without the trade disruption, used car prices would have softened. Instead, demand held firm.

Key Market Data, Canada Used Car Market 2026

• Average used vehicle price in Canada: $35,201 (AutoTrader Canada, end of 2025)
• New vehicle sales forecast to fall 4.3% in 2026 (TD Economics, February 2026)
• 47% of Canadian buyers said tariff concerns changed their vehicle purchase plans, 30% of those shifting to used instead of new (AutoTrader Canada consumer survey, 2025)
• Used vehicle inventory expected to stay tight through 2026 and potentially 2027 (DesRosiers Automotive Consultants)
• Average monthly auto loan payment in Canada is now approaching $1,000 pushing more buyers toward lower-priced used vehicles

The substitution effect is real and measurable. Consumers who six months ago were considering a new Honda CR-V or Toyota RAV4 are now walking onto used car lots in Hamilton, Brampton, and Mississauga instead. This is a direct, lasting demand shift, not a temporary blip.

The CUSMA Trade Review: Why Used Car Dealers in Ontario Should Pay Attention

The mandatory review of the Canada-United States-Mexico Agreement (CUSMA) is scheduled for July 2026. This trade deal governs virtually every vehicle sold in North America, and the uncertainty surrounding its review is already shaping production decisions and dealer inventory right now.

In February 2026, the U.S. International Trade Commission launched a formal investigation into CUSMA’s automotive rules of origin, examining how North American content requirements affect U.S. competitiveness. The ITC report is due by July 2027. But automakers are not waiting, they are making production decisions today based on worst-case scenarios.

Ontario Production Cuts, What It Means for Dealer Inventory

• GM’s Oshawa plant reduced a production shift in January 2026
• Stellantis’ Brampton Assembly plant remains idled
• Canadian vehicle output forecast to decline roughly 4% in 2026 year-over-year
• Fewer new vehicles produced today = fewer trade-ins and off-lease vehicles available to used dealers in 2027 and 2028

For used car dealers in Southern Ontario, this matters because: any disruption to new vehicle production or pricing will extend the wave of buyers flowing into the used market. As Canadian Auto Dealer magazine noted, even modest cost increases under revised trade rules push vehicles out of reach for price-sensitive customers, exactly the customers who turn to independent used dealerships.

The Challenge: More Buyers, But Harder to Finance

Demand is strong. Supply is tight. The market is moving toward used cars. But here is what every used car dealer in Ontario knows from experience: a motivated buyer without approved financing is a lost sale.

The same economic pressures driving buyers to your lot rising costs, inflation, stretched household budgets are also making it harder for those buyers to qualify for traditional bank financing. More of your customers are arriving with:

• Credit challenges or bruised credit history
• Limited down payment or recent job change
• Self-employed or non-traditional income
• New Canadian status with limited credit history
• Previous vehicle repossession or consumer proposal

These are real buyers, with real need for transportation, who are being turned away by banks and credit unions. They are your customers. And they need a financing who can say yes.

Ontario Underwriters: Auto Finance for Used Car Dealers Across Southern Ontario

Ontario Underwriters is a well-known and trusted auto financing serving used car dealers across Southern Ontario from the GTA to Hamilton, Mississauga, Brampton, Kitchener-Waterloo, Barrie, London, and the Niagara Region. We work exclusively with used car dealerships to get their customers financed quickly, professionally, and with minimal paperwork burden on your team.

We are not a lender. We are your financing partner which means we work the deal on your behalf, accessing multiple lending sources to find the approval your customer needs.

Why Used Car Dealers in Ontario Choose Ontario Underwriters

• Fast approvals, your customers get a decision without waiting days
• Simple documentation, streamlined process so your team focuses on selling, not filing
• Flexible credit, we work with challenged credit, new Canadians, self-employed applicants
• Multiple lender access, we find the best available approval for each deal
• Dedicated support, a real person who knows your dealership, not a call centre
• Well-known across the Southern Ontario used car dealer community
• Easy document submission

Ready to close more deals? Partner with Ontario Underwriters today.

Call: (437) 345-4477   |   Visit: on-u.org/dealers

Not a partner dealer yet? Getting set up takes minutes. Call us or visit our Dealers page.

Frequently Asked Questions 

Do you work with used car dealers outside Toronto?

Yes. Ontario Underwriters works with used car dealerships across all Southern Ontario, including Hamilton, Mississauga, Brampton, Oakville, Burlington, Kitchener-Waterloo, Guelph, Barrie, London, Windsor, St. Catharines, and the Niagara Region. If you are a used car dealer in Ontario, we want to work with you.

Can you finance customers with bad credit at a used car dealership in Ontario?

Absolutely. We specialize in finding financing solutions for customers who have been declined by banks, including buyers with bruised credit, previous bankruptcies, consumer proposals, or limited credit history. We access multiple lenders to find the approval that fits your customer’s situation.

How do used car dealers submit deals to Ontario Underwriters?

It is simple. Partner dealers submit documents through our secure online portal at on-u.org/document-submission or call us directly at (437) 345-4477. We handle the financing process from application to approval so your team can focus on your customers.

How does tariff uncertainty affect used car dealer inventory in Ontario?

U.S.-Canada tariffs have reduced new vehicle production and raised new vehicle prices, which pushes more buyers toward the used vehicle market. At the same time, fewer new vehicles being sold today means fewer trade-ins and off-lease vehicles entering the used market in coming years meaning used car inventory will remain tight in Ontario for the foreseeable future.

Sources

AutoTrader Canada / The Globe and Mail: Canadian automotive market and tariff impact analysis, February 2026
TD Economics: 2026 Canadian Automotive Outlook, February 2026
DesRosiers Automotive Consultants / Used Car Dealers Association: supply and market analysis, 2026
Canadian Auto Dealer Magazine: CUSMA review coverage, December 2025 / March 2026
BNN Bloomberg: U.S. ITC CUSMA automotive rules of origin investigation launch, February 19, 2026
Motor Illustrated: Average new vehicle prices Canada, January 2026
Canadian Black Book: Wholesale vehicle valuation data, early 2026

Ontario Underwriters Inc.  | Southern Ontario’s Used Car Finance

This newsletter is intended for used car dealer partners and prospective dealer partners in Southern Ontario

Prices, Supply, Dealer Trends and Buying Insights

DesRosiers Automotive Consultants and the Used Car Dealers Association continue to monitor the rapidly evolving Canadian used vehicle market. As the industry moves through 2026, the market shows signs of stabilization following several years of volatility caused by supply shortages, pandemic disruptions, and rising vehicle costs.

Canada’s used car market remains one of the most important segments of the automotive industry, serving millions of consumers looking for affordable transportation. However, pricing levels, inventory sourcing, and consumer behaviour are continuing to shift.

Used Car Prices in Canada Remain Historically High

Used car prices in Canada remain significantly higher than historical averages, although price increases have slowed compared with the dramatic growth seen between 2021 and 2023.

According to the AutoTrader Canada Price Index, the average price of a used vehicle in Canada was approximately $35,201 in 2025. Prices varied depending on vehicle category, region and age, but the overall trend shows that used vehicles remain far more expensive than they were prior to the pandemic.

Several factors continue to support higher used vehicle prices:

• limited used vehicle inventory
• higher new vehicle prices
• strong consumer demand
• extended vehicle ownership cycles

At the same time, the average price of a new vehicle in Canada exceeded $63,000 in 2025, which continues to push many buyers toward the used vehicle market.

Used Vehicle Supply Remains Tight

Inventory shortages remain one of the most important issues affecting used car dealers in Canada.

The supply of used vehicles available to dealers was heavily impacted by reduced new vehicle sales between 2020 and 2023, when global semiconductor shortages significantly slowed production. Because fewer new vehicles were sold during those years, fewer vehicles are now entering the used market through trade ins or lease returns.

Market analysts at DesRosiers Automotive Consultants note that the impact of this supply disruption will likely continue through 2026 and potentially into 2027.

Additional supply pressure is also coming from cross border vehicle exports, with some Canadian used vehicles being exported to the United States due to favorable exchange rates and pricing differences.

Wholesale Used Vehicle Prices Showing Early Decline

While retail used vehicle prices remain elevated, the wholesale auction market has started to soften slightly in early 2026.

Industry reports from Canadian Black Book show modest declines in wholesale values across several vehicle segments, particularly vans and light trucks.

This softening suggests that supply conditions are gradually improving. However, the impact on retail pricing may take time to appear because dealers must still manage acquisition costs, transportation costs and reconditioning expenses.

Demand for Used Cars in Canada Remains Strong

Demand for used vehicles remains robust across Canada, particularly in urban markets such as Toronto, Vancouver, Calgary and Montreal.

Several economic factors continue to drive consumer demand for used cars:

• high cost of new vehicles
• increased interest rates on auto loans
• growing population and immigration
• affordability pressures on households

Many Canadian buyers are also keeping their vehicles longer than before, which reduces trade ins and further tightens supply in the used vehicle market.

Used Electric Vehicles Entering the Market

Another emerging trend in the Canadian used car market is the gradual increase in used electric vehicles.

Although the majority of used vehicle sales still consist of gasoline powered vehicles, early electric vehicle models are now beginning to enter the used market as leases expire and owners trade them in.

Dealer surveys conducted with the Used Car Dealers Association indicate that used electric vehicles currently represent a small portion of sales but are slowly increasing each year.

Buying Used Cars in Canada: Consumer Trends

Consumers purchasing used vehicles in Canada are becoming increasingly informed and price conscious. Online research has become a key part of the vehicle buying process, with many buyers comparing listings across multiple platforms before making a purchase.

Common trends in used car buying behaviour include:

• longer financing terms
• increased online vehicle research
• expanded geographic search for better deals
• higher demand for reliable SUVs and pickup trucks

Digital marketplaces such as AutoTrader Canada continue to play a major role in connecting buyers with used vehicle dealers across the country.

Market Outlook for 2026 and Beyond

Industry analysts expect the Canadian used vehicle market to gradually stabilize in the coming years as supply improves.

Forecasts suggest:

• used vehicle depreciation may return closer to historical averages
• inventory levels should slowly improve as new vehicle production normalizes
• consumer demand will remain strong due to high new vehicle prices

However, many experts believe that used car prices will remain structurally higher than pre pandemic levels due to the increased cost of producing new vehicles and ongoing global supply chain adjustments.

The Canadian used vehicle market is transitioning into a more balanced phase after several years of disruption. While prices remain elevated and supply constraints persist, early signs of stabilization are beginning to appear.

Used car dealers across Canada continue to adapt to evolving market conditions by improving sourcing strategies, expanding online sales channels, and responding to shifting consumer preferences.

As affordability continues to shape vehicle purchasing decisions, the used vehicle market will remain a critical component of Canada’s automotive landscape.

DesRosiers Automotive Consultants. (2026). Canadian automotive market insights and industry analysis.
Used Car Dealers Association. (2026). UCDA industry resources and dealer market updates.
AutoTrader Canada. (2026). Canadian automotive marketplace and vehicle price index.
Canadian Black Book. (2026). Vehicle valuation data and automotive analytics.

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:

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

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.

AutoTrader’s report showed a widening gap between what Canadians search for and what they ultimately buy, signalling a reset in consumer demand patterns likely influenced by economic conditions.

While performance and luxury models such as the Ford Mustang, Chevrolet Corvette and Porsche 911 continue to attract attention online, none made AutoTrader’s Top Sold list for 2025. Instead, practical vehicles dominated purchases, led by the Ford F-150, Toyota RAV4 and Honda CR-V. Luxury searches fell 11 per cent year over year, reinforcing the trend toward attainable options.

The Top Searched list for 2025 included aspirational models alongside mainstream favourites, with the Ford F-150, Toyota RAV4 and Honda Civic ranking first, second and third. However, the Top Sold list tells a different story: the Ford F-150 retained its top spot, followed by the Toyota RAV4, Honda CR-V, Dodge Ram 1500 and Honda Civic. Other strong sellers included the Nissan Rogue, Ford Escape and Toyota Corolla.

Pricing trends also shaped consumer priorities. Despite tariff pressures and inventory challenges, new vehicle prices decreased nearly three per cent year over year, averaging $63,665. Used vehicle prices rose slightly to $35,494. Improved new car inventory and a gradual increase in used supply helped stabilize prices, though AutoTrader expected used inventory to remain tight until at least late 2027.

Electric vehicle adoption continues to stall despite growing curiosity. EV searches climbed to nine per cent, but willingness to buy dropped to 42 per cent, while hybrid consideration surged to 62 per cent. SUVs remain dominant, accounting for 42 per cent of all searches — their highest share in three years — and making up 52 per cent of used listings and 60 per cent of new inventory on AutoTrader.

The report also pointed to technology as a major driver of future innovation, with automakers accelerating features such as hands-free driving, smarter charging, AI integration and vehicle-to-grid capabilities.

The gap between vehicles Canadians search, buy. Auto Service World. (2026, January 9). https://www.autoserviceworld.com/the-gap-between-vehicles-canadians-search-buy/

With the holiday season approaching quickly, we were wondering what sort of vehicles Santa should be loading into his sleigh as gifts for Canadian drivers. As we do every year, we asked Canadians what kind of cars they would like to see under their tree. In true Canadian style most respondents went for practicality, with 36.1% hoping for an SUV and just 12.6% yearning for a sports car. In terms of colour, Canadians were again unsurprisingly conservative with black the top choice at 27.6%, and white coming in third at 14.3%. In a slight (tepid) burst of excitement, blue did come second at 14.9% with red proving to also be a popular choice this year at 12.1%. Andrew King, Managing Partner at DAC commented that “Last year Canadians were most likely to wish for a black SUV, and for 2025 they remained remarkably consistent. Given the choice, we here at DAC would always take a sports car; the colour is irrelevant.”

The data above comes from DAC’s annual Light Vehicle Study; a survey of 4,500 Canadian vehicle owners that tracks maintenance habits, incidence of repair, brand preference, costs, and more across a multitude of different aftermarket product categories.

desrosiers, daniel. (2025, December 10). Santa’s Canadian Vehicle Wish List.

Canadians are used to hearing about pricey housing. But another expense has quietly grown to mortgage-sized proportions for many: their car.

With consumers now paying around an average of $50,000 for a new ride, nearly 30 per cent of auto loans in the new-vehicle market come with a monthly payment of $1,000 or more, according to analytics firm J.D. Power. It’s a similar story in the lease market, where the average payment is just under $800 a month.

For comparison, the average price of a new vehicle was $12,000 in 1985, according to Statistics Canada, equivalent to just over $31,000 in 2025, adjusted for inflation. That’s below what the average second-hand car costs today.

Meanwhile across both the new- and used-vehicle markets, the most popular auto loan term length has grown to seven years, the J.D. Power data show, as Canadians stretch out amortizations to keep monthly payments manageable.

Ever more sophisticated technology, government regulations, the push toward electric vehicles, pandemic disruptions and, lately, auto tariffs all help explain why cars have become so expensive.

As auto companies retreat from Canada, do government subsidies still make sense?

Opinion: Trump is turning America’s auto industry into a global backwater. Canada must now go its own way

But the end result for consumers is the same: Car payments are increasingly like mortgages. That’s not just because of their size in dollar terms, but also because, just as housing costs, they take up a massive portion of household budgets.

The after-tax income of a typical Canadian household 40 years ago was around $62,000 in inflation-adjusted terms, according to Statscan. In 2023, the latest available data, it stood at $74,200, or around $77,000 in 2025 dollars. That’s a 24-per-cent rise in real terms.

That may seem a healthy increase (although much of that growth comes from government transfers, rather than wage gains). But it pales compared with the trajectory of car prices, which jumped by around 70 per cent over the same period.

Buying a second-hand vehicle is an obvious way to keep car payments in check. But even that is hardly a bargain. For the past four years, average prices have been firmly above $35,000, according to J.D. Power.

In smaller cities where housing remains affordable, the gap between mortgage and auto loan payments has become alarmingly small. In Saguenay, Que., for example, the average mortgage instalment is $886 a month, only around $340 more than the typical monthly auto loan charge of $547, according to data from Equifax and the Canada Mortgage and Housing Corp.

For the first time, DAC has been able to obtain data that not only details the number of used vehicles that flowed into the US in 2024 but also what those vehicles were by brand and vehicle age. The full data profile and brand totals are available in the DesRosiers Used Vehicle Report. Given that the great majority of these vehicles originate in Canada the implications of this flow for both the new and used vehicle markets in Canada are significant. A change in the scale and ratio of vehicles flowing between the two countries impacts the supply of used vehicles within Canada, in turn influencing pricing and sales volumes.

From a model year perspective, the flow of used vehicle imports into the USA for 2024 was heavily weighted toward younger vehicles, with 40.1% landing at 0-2 years old. A further 34.7% were 3-5 years old, dropping significantly for subsequent age groups. The used vehicle imports were also heavily biased towards specific vehicle brands and particular segments – off-lease product, luxury vehicles, and pick-ups were all overweighted in the distribution.

Andrew King, Managing Partner at DAC commented “In recent years, hundreds of thousands of young Canadian used vehicles have been flowing to the US each year.” He continued “The unclear nature and application of the tariffs introduced by the US administration has thoroughly muddied the waters on what future patterns will be and on the consequences for the Canadian market.” In this light, the brand level data that is now available is critical for vehicle companies to understand the implications on their Canadian new and used operations.

DesRosiers Automotive Consultants. (2024). [Email newsletter on U.S. used-vehicle imports]. DesRosiers Automotive Consultants.