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/
Pre-owned vehicles are shown at the Motor City Chrysler dealership in Windsor on Wednesday, Jan. 29, 2025. Threatened U.S. trade tariffs could boost demand for used vehicles. Photo by Dan Janisse /Windsor Star
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/
Pre-owned vehicles are shown at the Motor City Chrysler dealership in Windsor on Wednesday, Jan. 29, 2025. Threatened U.S. trade tariffs could boost demand for used vehicles. Photo by Dan Janisse
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.”
Baris Akyurek, vice-president of insights and intelligence at AutoTrader. Photo by Jeremy Fueser (AutoTrader)
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.
A pre-owned vehicle is shown at the Motor City Chrysler dealership in Windsor on Wednesday, Jan. 29, 2025. Photo by Dan Janisse
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.”
Expect U.S. tariffs to spur demand for used cars — auto analyst | Windsor Star. (n.d.). https://windsorstar.com/news/local-news/expect-u-s-tariffs-to-spur-demand-for-used-cars-auto-analyst
Canadian Black Book’s recently released Used Vehicle Retention Index for December 2024 reveals a decrease to 135.7 points from November’s 136.2 points. Year-over-year, the index slipped 7.6%.
In its update CBB said the declines seen in the Canadian wholesale market last year were “mostly front ended,” as the declines slowed during the fourth quarter of 2024. “This was mainly linked to the decline of the Canadian dollar and the increase in activity of the export market,” said David Robins, Senior Manager and Head of Canadian Vehicle Valuations at Canadian Black Book, in a statement.
As a reminder, the index peaked in March of 2022 after reaching 165 Index points. Prior to that peak the index had experienced unprecedented growth in used values starting in the late summer of 2020. At that time the index was low, at 100.5 points. In comparison, the index was launched in January 2005 with a value of 100.0 for the market.
CBB calculates the index using its published Wholesale Average value on two to six-year-old used vehicles, as a percent of original typically equipped MSRP. “It is weighted based on registration volume and adjusted for seasonality, vehicle age, mileage, and condition,” they said.
dealer, C. auto, & dealer, C. auto. (2025, January 10). CBB used vehicle retention index marginally down in December. Canadian Auto Dealer. https://canadianautodealer.ca/2025/01/cbb-used-vehicle-retention-index-marginally-down-in-december/
Used vehicles for sale are seen at an auto mall in Ottawa, on Monday, April 26, 2021. Photo by THE CANADIAN PRESS/Justin Tang
Canada exports between 10 and 15% of its used vehicles to the U.S. annually. Our considerably weaker dollar has long made our used stock — especially the highly coveted luxury, SUV, and truck sector — very attractive.
But with the threat (or promise, depending on which side of the fence you’re on, I guess?) of tariffs coming from an unpredictable new administration, shockwaves would be sent through Canada’s auto industry. I spoke with Daniel Ross, senior manager at Canadian Black Book in charge of Industry Insights & Residual Value Strategy about those tariffs in a wide-ranging interview exploring what the coming year holds for Canadians from an automotive perspective.
American tariffs — Trump proposed 25% — would have a devastating impact on the Canadian auto industry at every level. Our supply chains are entwined with American ones, and parts used in the assembly of vehicles produced here often go back and forth across the border multiple times. To subject each of these transactions to tariffs would be crippling. Is there any glimpse of a silver lining for consumers?
“There’s a huge interest in our cars right now because we are sub 70 cents on the dollar,” says Ross. Proposed tariffs would wipe that out. “The luxury segment, the large SUVs, the trucks that the Americans want, that’s where we’ve seen high retained value. Is that artificially implanted by U.S. interest? Probably. If you removed it, that would be subject to some severe declines in the retained value.”
Every year, Canadian Black Book announces its best residual value awards. It gives consumers a peek at what that expensive shiny piece of machinery in their driveway will be worth in four years. With loan terms often stretching far beyond that, it’s valuable information. Proposed tariffs would throw a wrench into the works.
From a consumer perspective, this could be a dual-edged sword. You want a high retained value. If that “severely declines,” your car is worth less. But if a huge swath of our used inventory stays put, prices on used vehicles would be driven down. Depending on where you sit on the car buying/owner spectrum, this might be a window of relief for people who have been unable to find one since before the pandemic. It’s not enough to make tariffs a good thing, but if they happen anyway, it’s something to consider.
The erratic messaging coming from the U.S. has also tossed a chill through the electric vehicle part of the industry. “The tipping point for EV adoption is 10 per cent, and we’ve been over 12 all last year,” says Ross. We are definitely going EV, though he says the path will be a little longer. “Manufacturers have pushed launch schedules further out, like Ford’s three-row SUV has been pushed to likely 2027.” Quebec changed its Roulez vert EV program at the end of 2024, dropping the provincial subsidy from $7,000 to $4,000. That resulted in a huge rush in Q3 (and likely Q4, pending final sales numbers), and the Quebec government has suspended even that as of February 1 for 60 days, to build in some breathing room.
How does politics impact the auto industry?
Late Friday, another blow for EV buyers came from Transport Canada: “The Government of Canada has just announced…that the federal electric vehicle incentives program, the iZev program, will be suspended on or before March 31, 2025.This means that the $5,000 credit available to buyers of eligible EVs will no longer be available to consumers, at least temporarily,” reports Auto123.
Ross notes how politics deeply impacts the auto industry. A change in government makes the resumption of Quebec subsidies a toss-up. If a change at the federal level strips out those subsidies, does Quebec — by far the biggest adopter of EVs in Canada — raise their subsidy back up, or scrap it altogether?
“OEMs are huge machines that must move forward,” says Ross. “It’s a tough time to be a president of an OEM right now. Decisions are based on data, and we just don’t have the data.” The elephant in the room, of course, is that political decisions are increasingly not based on data. How is an industry that relies on it supposed to set its sails?
“This is the time for Canada to stake their claim as a global leader.” – Daniel Ross
The proposed merger between Honda and Nissan didn’t surprise Ross. He notes car manufacturers have long had consolidations and partnerships, and expects to see more like the Volkswagen alliance with Rivian. “The number one thing any OEM is looking to achieve now is cost-effective EV development,” says Ross.
He notes Honda has had previous partnerships — most notably in motorsports — fizzle out, but Nissan’s EV history, starting with the Leaf, could be a good match for Honda, an engineering powerhouse. Both need next-generation battery architecture and chemistry and they’re both talking about solid-state battery development. While Nissan, at first glance, gets the win checking the financial and reputational boxes from the merger, Ross says Honda would see benefits from Nissan’s history in the EV market, as well as acquiring vehicles for the body-on-frame segment, especially for the American market.
Lucid, a leader and frontrunner in EV tech recently revealedit’s in talks to partner with Aston Martin and potentially other OEMs. The overall theme when it comes to partnerships and consolidations, according to Ross is thus: “Every manufacturer knows they have to compete and this is how they’re going to do it or they’ll be dead in the water.”
With an industry holding its breath in some ways, Canadians also have to factor in the billions that have been pumped into EV battery manufacturing. Ross says Canada did the right thing. “We’ll be building here but supporting a global supply chain,” he explains. These were long-term moves to position Canada for the future, with plants serving multiple use purposes (cathode assembly, recycling, battery components) both for North America and globally. In Windsor, NextStar Energy, the Stellantis and LG Energy Solution EV battery venture, started production in October. “This is the time for Canada to stake their claim as a global leader,” says Ross.
China is building large quantities of high-quality EVs. Tariffs are intended to fend them off from coming here, but realistically, can that happen? “North America will eventually be susceptible to these cars,” says Ross. “In terms of what domestic manufacturers are doing overseas, their best days there are behind them…Chinese manufacturers are making good quality tech-laden cars that could very easily be sold over here.” Tariffs protect domestic manufacturers from an unfair advantage of the Chinese labour market (Unions? Human rights?), but Ross sees a future with Chinese cars built here, as well as Mexico. “If they talk to our political leaders and accept tariffs and make them equivalent in price, if we can address issues around things like security, why not bring them here and give consumers another avenue of choice?”
Could U.S. tariffs drive down used car prices for Canadian consumers? | driving. (n.d.-a). https://driving.ca/column/lorraine/u-s-tariffs-used-car-prices-canadian-consumers
For the first time in six months, prices in the Canadian wholesale vehicle market dipped.
Canadian Black Book’s Used Vehicle Retention Index dropped to 135.7 in December, down 0.4% from 136.2 the previous month — ending a string of five consecutive months of rising or steady numbers.
In July, the index broke a massive streak of 27 months without an increase.
“The declines seen in the Canadian wholesale market in 2024 were mostly front ended,” CBB senior manager and head of Canadian vehicle valuations David Robins said, “as declines slowed during the fourth quarter of the year. This was mainly linked to the decline of the Canadian dollar and the increase in activity of the export market.”
The index is down 7.6% year-over-year. It peaked at a record 165.0 in March of 2022 after used-car values skyrocketed from a low of 100.5 in June 2020.
The index is calculated using CBB’s published wholesale average value on 2-6-year-old used vehicles as a percentage of original typically equipped MSRP and weighted based on registration volume and adjusted for seasonality, vehicle age, mileage and condition.
Market decline slows as year opens
Looking at activity to start the year, Canadian used-vehicle wholesale values declined 0.14% for the week ending Jan. 4, according to Canadian Black Book’s weekly Market Insights report, as the rate of decline slowed for the third consecutive week during the holiday season.
The previous week’s decrease of 0.21% followed weekly drops of 0.33% and 0.64%.
Trucks/SUVs had a strong showing, down just 0.06% for the week with gains posted by three segments — full-size pickups (up 0.08%), full-size vans (0.07%) and sub-compact crossovers (0.03%). Compact Vans were the only truck segment to lose more than $100, falling $148 (0.76%).
Cars overall were down 0.23%, with sporty cars (down 0.43%, $112) and prestige luxury cars (0.39%, $236) losing the most value. No car segments gained value.
The 14-day moving average retail listing price was $34,950, down slightly from the previous week’s $35,000.
In the U.S., the overall market was down 0.44% for the week. CBB analysts said depreciation remained stable, with auction inventories rising and improved conversion rates following the slower Christmas week.
“Last week’s depreciation trends reflected a balance,” the report said, “with vehicles maintaining their values more steadily as auction activity picked up post-holiday.”
CBB monthly index drops for first time since June. Auto Remarketing. (n.d.). https://www.autoremarketing.com/arcanada/cbb-monthly-index-drops-for-first-time-since-june/
New York NY/USA-July 9, 2017 A dealer in used cars in the Woodside neighborhood of Queens in New York
When U.S. President-elect Donald Trump launched the threat of a 25 per cent tariff on all products entering the U.S. from both Canada and Mexico, the automotive industry took notice.
While a lot of the focus has been on the negative impact on new vehicles and the auto parts industry, the damage to the used car supply could be considerable, according to a LinkedIn article from Brian Murphy, Senior Consultant with Clarify Group Inc. and the former Managing Director of Kelly Blue Book in Canada and Vice President Research & Analytics at Canadian Black Book.
The tariff concerns were sparked after Trump wrote on his Truth Social platform that the tariff “will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” He has maintained that position in several media interviews since then.
Based on the Ivey Business School, industries in Canada that are most reliant on cross-border supply chains would experience the most severe impact. “The automotive sector especially, with 20 per cent of its inputs sourced across borders, faces significant cost increases and disruptions,” they said in an article posted on their website.
They also said companies would need to act fast to protect their operations, starting with a supply chain assessment that would help businesses pinpoint risks and prepare for potential disruptions.
Brian Murphy, Senior Consultant with Clarify Group Inc. and the former Senior Director of Kelly Blue Book & Data Solutions (Canada & Brazil) and Vice President Research & Analytics at Canadian Black Book, argued in a LinkedIn article that the impact a 25 per cent tariff could be devastating for the used car market — particularly in Canada.
His article was titled: “Happy New Year: unhappy used car price crash?”
“For those of you who don’t know (and I know many of you do!) about 200,000 to 300,000 used cars are exported every year from Canada to the U.S. This seems like a shockingly large number, and it is,” he wrote, noting that “the shipping of so many used cars out of this market has a major impact on supply, demand and prices here in Canada and the U.S.”
“If a 25 per cent tax is imposed, it would halt the export of used cars from Canada to the U.S. almost instantly,” said Murphy. “Once a 25 per cent tax is applied to a used vehicle, plus a few thousand dollars in shipping and handling fees, to export a car to the U.S. from Canada would likely not be a profitable enterprise.”
Murphy said used vehicle prices at wholesale would plummet, and that vehicles at lease return time would be worth much less.
While a 25 per cent tariff of the nature Trump has declared would likely violate USMCA provisions, the administration has been shown in the past to act on some threats — and use others simply as leverage.
Dealers might be wise to consider their exposure on their used car inventory in the coming weeks, and to keep tabs on whether the tariffs will be imposed.
The Canadian Automobile Dealers Association (CADA) wrote about the auto industry’s response to tariffs and the association’s involvement in an article in its newsletter CADA Newsline this week.
Phillips, T., Lefko, P., Lefko, P., dealer, C. auto, & Phillips, T. (2024, December 11). A 25% U.S. tariff would severely impact used cars. Canadian Auto Dealer. https://canadianautodealer.ca/2024/12/a-25-u-s-tariff-would-severely-impact-used-cars/
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Noble Restaurant, Churchill Lounge and The Drawing Room – Prince of Wales Hotel; Tiara Restaurant and Bacchus Lounge – Queen’s Landing Hotel; Cannery Restaurant and Vintages Wine Bar – Pillar and Post Hotel; HobNob Restaurant and Lounge – Charles Hotel, Zees Grill – Shaw Club Hotel; Niagara’s Finest Thai; Masaki Sushi; Chili Jiao Restaurant and Butler’s Sports Bar & Grill.
