Despite ongoing economic uncertainty, Canadian consumers remain eager to get behind the wheel of a new or used vehicle, according to new research

Released by AutoTrader in April, the 2025 Car Shopper Perceptions & Intentions study found that 27 per cent of Canadians plan to purchase a vehicle within the next six months — a four-point increase from November 2024 and back in line with August 2024.

New vehicle purchase intentions are leading the charge, with 18 per cent of respondents eyeing a brand-new ride, up four points since late last year. This uptick in intent comes even as high interest rates and vehicle prices continue to weigh on consumer sentiment.

Confidence in the economy remains relatively low, with just 42 per cent of respondents expressing optimism. However, personal financial confidence is holding steady, with 78 per cent saying they feel secure in their own financial situation. However, that dips to 74 per cent when looking at the next six months.

Among those who have decided to delay their vehicle purchase, the top reasons include the good condition of their current vehicle (50 per cent), high vehicle prices (29 per cent) and affordability concerns (22 per cent). High interest rates were also cited by 16 per cent of respondents.

Digital tools continue to play a central role in the car-buying journey. Online automotive marketplaces are the most popular destination for used car shoppers, with 55 per cent browsing classifieds, followed by dealership websites at 39 per cent.

When it comes to completing the purchase, Canadians are increasingly open to digital options. Three in five say they would consider buying a vehicle fully online, while 88 per cent of new vehicle shoppers and 85 per cent of used vehicle shoppers prefer to complete at least part of the process digitally. Key online activities include researching vehicles, inquiring about a vehicle of interest, arranging delivery or home test drives, getting trade-in valuations, and pre-qualifying for financing.

Canadian car buyers show steady confidence despite economic pressures. Auto Service World. (2025, June 20). https://www.autoserviceworld.com/canadian-car-buyers-show-steady-confidence-despite-economic-pressures/

Canada Used Car Market Size and Share

Canada Used Car Market Analysis by Mordor Intelligence

The Canadian used car market size reached USD 17.71 billion in 2025 and is forecast to climb to USD 24.54 billion by 2030, advancing at a 6.74% CAGR. Robust demand persists as consumers look for affordable mobility amid high new-vehicle prices, while digital marketplaces shorten search times and increase price transparency. Extended ownership cycles and pandemic-era production shortfalls have tightened late-model supply, elevating resale values and pushing buyers toward 3-5-year-old vehicles that balance modern features with cost savings. SUVs dominate transactions thanks to fuel-efficient powertrains and lifestyle shifts favoring cargo versatility. Online channels now originate most purchase journeys, enabling organized dealers to capture scale benefits in data-driven inventory sourcing and finance offerings. Provincial incentive stacking for low-emission vehicles, especially in Quebec and British Columbia, is accelerating used EV adoption and reshaping residual-value calculations.

Key Report Takeaways

• By vehicle type, SUVs led with 50.46% of the Canadian used car market share in 2024, and expanding at a CAGR of 18.87% by 2030.
• By vehicle age, the 3–5-year segment held 38.32% share of the Canadian used car market size in 2024, while the 0–2-year segment is set to grow at 22.44% CAGR to 2030.
• By price band, the USD 10,000–14,999 bracket captured a 35.58% share in 2024, whereas Up to 30,000 is set to expand at 14.28% CAGR between 2025-2030.
• By vendor type, organized dealers commanded a 60.18% share in 2024 and are on track for a 13.77% CAGR to 2030.
• By fuel type, petrol units represented a 64.27% share in 2024, whereas electric vehicles are poised for a 20.40% CAGR to 2030.
• By sales channel, digital classified portals accounted for 54.06% share in 2024, however online – pure-play e-Retailers is expected to grow at 25.5% CAGR by 2030.

Canada Used Car Market Trends and Insights

Drivers Impact Analysis

Accelerating Consumer Shift to Online Used-Vehicle Marketplaces

More than 95% of HGregoire shoppers now begin their journey on a website before visiting a showroom, inverting the traditional research sequence. Inventory aggregation and instant price comparisons reduce search friction, and contactless delivery options resonate with post-pandemic preferences. Clutch raised USD 50 million in February 2025 to scale its home-delivery model, aiming to lower overhead and pass savings to buyers[1]“Online Used Car Seller Clutch Secures $50M Financing Round to Fund Canadian Expansion,” BNN Bloomberg, bnnbloomberg.ca. Failures such as Canada Drives, which entered creditor protection in 2023, underscore that pure-digital strategies need complementary physical infrastructure to manage inventory economics. As algorithmic pricing tools become widespread, organized vendors translate data insights into faster turn times and optimized reconditioning, widening the gap with smaller rivals.

Advanced Battery-Health Diagnostics Boosting Confidence in Used EVs

Standardized state-of-health reports quantify remaining battery capacity, directly influencing residual values and warranty underwriting. The approach tackles the 49.1% five-year depreciation typical of EVs, a steeper curve than internal-combustion cars due largely to battery uncertainty. Automakers now issue CPO warranties that specifically cover battery performance, narrowing the risk differential for second owners. Better diagnostics are expected to compress the value gap between EVs and conventional models, enlarging the addressable pool of price-sensitive shoppers. Elevated consumer trust feeds back into trade-in volumes, enriching inventory pipelines for dealers in provinces with aggressive ZEV mandates.

Expansion of OEM-Backed Certified Pre-Owned Programs

Manufacturers view certified used inventory as a retention funnel: 40% of Toyota’s CPO buyers eventually purchase a new Toyota. Tiered certification, such as Toyota’s new “silver” grade, broadens reach across budgets while maintaining inspection rigor. The scarcity of late-model vehicles lifts the strategic value of CPO schemes, enabling automakers to channel constrained supply toward the most profitable mix of new and certified units. OEMs also use CPO price floors to protect new-model transaction prices, preserving brand equity and smoothing production planning across volatile demand cycles.

Growing Availability of Vehicle-History & Inspection Transparency

CARFAX Canada’s 2024 report showed 25% of cars carry recorded damage and over 40% have active liens, intensifying the need for robust disclosure. The organization’s VIN Fraud Check flagged 127,000 potentially cloned vehicles in Ontario alone, prompting tougher penalties for inaccurate declarations. Uniform disclosure laws across major provinces have narrowed the information gap between franchised dealers and private sellers, compressing price premiums historically linked to trust. Accessible inspection apps let buyers tap third-party technicians, encouraging competitive listings and faster inventory turnover on digital portals.

Restraints Impact Analysis

Intensifying Competition from Large Dealer Groups & Classifieds Portals

Scale lets national chains negotiate favorable floorplan rates, run omnichannel campaigns, and deploy advanced CRM suites. AutoCanada shuttered seven under-performing RightRide sites in 2024 to concentrate capital on high-margin rooftops, illustrating portfolio optimization among majors. AutoScout24’s acquisition of TRADER Corporation folds 26 million monthly visits into a single ecosystem, layering marketplace reach atop dealer software to deepen data moats. Smaller independents must pivot toward niche inventory or hyper-local service or risk margin compression amid rising acquisition costs and digital ad inflation.

Limited Stock of Late-Model Vehicles Post-Pandemic Supply Crunch

Semiconductor shortages nearly doubled average ownership tenures, bottlenecking the flow of 0–5-year vehicles that command the steepest gross profits. Dealers expanded sourcing to consumer buy-backs, fleet disposals, and U.S. auctions, adding logistics complexity and eroding margins. Electric-vehicle scarcity is more acute as limited new-car output and strong first-owner retention yield thin secondary-market supply. Although February 2024 new-vehicle inventory reached a record 168,000 units, the lag between production recovery and used-market entry means supply tightness persists through 2027.

Segment Analysis
By Vehicle Type: SUVs Drive Market Evolution

SUVs accounted for 50.46% of the Canadian used car market in 2024 and are set to advance at an 18.87% CAGR, reinforcing their role as the volume and growth engine of the Canadian used car market size. Fuel-efficiency gains and the popularity of all-wheel drive encourage households to shift away from sedans, while crossover styling appeals to city drivers seeking maneuverability.
The 0–2-year SUV cohort dominates value appreciation because of upgraded ADAS features, commanding premiums that organized dealers monetize through certified programs. Sedans retain equity in urban centers where parking constraints favor smaller footprints, yet shrinking OEM model lines put structural pressure on residuals. Hatchbacks sustain demand among first-time buyers and ride-share drivers who value low running costs. Niche categories such as convertibles and coupes rely on emotional appeal; inventory cycle times lengthen during economic slowdowns as discretionary spending softens but rebound quickly when consumer confidence returns.

Growing electrification intersects with SUV momentum as manufacturers roll out battery-electric crossovers toward 2027. Provincial incentives, most notably Quebec’s Roulez vert rebate of up to CAD 8,000 (USD 5,900), shorten payback periods and feed demand for used battery SUVs once leases mature. Dealers that invest early in high-voltage technician training capture diagnostic revenue and build customer trust[2]“About Roulez vert Program,” Government of Quebec, Quebec.ca,. However, charging-infrastructure gaps in rural Canada limit penetration, keeping petrol-powered SUVs dominant outside metropolitan corridors.

By Vehicle Age: Late-Model Premium Drives Growth

Vehicles aged 3–5 years held a 38.32% share in 2024, underlining their importance in the Canadian used car market share calculus. Buyers view this age band as the sweet spot where factory warranties overlap with significant depreciation savings. Organized dealers curate this inventory through lease-return programs that ensure consistent condition grading, allowing higher F&I attachment rates and faster turnover. In contrast, the 0–2-year bracket is slated for a 22.44% CAGR through 2030, propelled by buyers who want near-new features without absorbing first-year depreciation; its rise mirrors greater penetration of short-cycle leases in new-car financing.
Vehicles aged 6–8 years continue to satisfy budget-constrained families, though extended power-train warranties and improved corrosion protection enable owners to keep cars longer, trimming annual inflow. The 9–12-year band faces regulatory headwinds as provinces enforce stringent emissions testing, pressuring resale values and shifting such units toward export or dismantling channels. Cars older than 12 years chiefly serve cash buyers, immigrants, and credit-challenged consumers; supply is abundant but reconditioning costs and lien risk temper dealer appetite. The age profile therefore bifurcates demand between premium late-model shoppers seeking technology and lower-income buyers emphasizing price above all else.

By Price Segment: Mid-Market Concentration Reflects Affordability Pressures

The USD 10,000–14,999 range represented 35.58% of Canadian used car market transactions in 2024, anchoring affordability for middle-income households. Credit unions and captive finance arms actively court this ticket size with 60-month amortizations, balancing monthly payments against residual risk. The sub-USD 5,000 tier remains volume-rich but value-sparse; vehicles often lack modern safety features, and higher mileage inflates warranty costs for dealers, steering most activity to private sellers. Conversely, units priced above USD 30,000 are projected to rise at a 14.28% CAGR, driven by luxury-brand shoppers seeking technology packages and premium interiors without new-car obligations.

The USD 15,000–19,999 and USD 20,000–29,999 brackets benefit from widening certified-pre-owned selections, attracting buyers upgrading from older vehicles. Improved telematics and over-the-air updates extend relevance for higher-priced used models, enhancing value retention. Inflation, however, stresses discretionary budgets, prompting some consumers to trade down and reinforcing demand clustering around the sub-USD 15,000 median. As digital marketplaces publish financing calculators adjacent to listings, price sensitivity crystallizes, and sellers compete on total cost of ownership rather than sticker price alone.

By Vendor Type: Organized Dealers Gain Market Share

Organized vendors held 60.18% share in 2024, underscoring their ascendance within the Canadian used car market size. Compliance infrastructure, warranty underwriting capacity, and direct access to captive finance enable these players to outcompete informal operators. Consolidation amplifies buying power at national auctions, lowering per-unit acquisition costs while technology investments sharpen pricing models. Meanwhile, unorganized vendors—private sellers and small lots—retain lower overhead but struggle with rising regulatory complexity, including mandatory lien disclosure and odometer certification. Hybrid models are emerging, where peer-to-peer platforms bolt on professional inspection and escrow services, blurring traditional boundaries.

Organized dealers benefit disproportionately from the surge in online leads because they can integrate omnichannel touchpoints, offering click-to-door delivery and post-sale service packages that drive recurring revenue. Digital F&I add-ons such as extended warranty and GAP insurance show higher attachment rates when bundled in a single checkout flow. Independent dealers respond by specializing in subprime financing or niche inventory like performance imports. Over time, compliance costs and antifraud tech investment are expected to accelerate market share drift toward organized formats.

By Fuel Type: Electrification Reshapes Demand Patterns

Petrol vehicles made up 64.27% of transactions in 2024 and will remain the backbone of the Canadian used car market for the next five years, reflecting nationwide fueling infrastructure and resale familiarity. Yet electric vehicles are forecast to register a 20.4% CAGR through 2030, aided by overlapping federal and provincial incentives and falling battery-replacement costs. Hybrid models provide an intermediate step for households lacking home charging access, sustaining residuals in urban centers. Diesel demand declines quickly under stricter emissions rules and downtown restrictions, prompting significant value erosion in older pickups and cargo vans.

LPG/CNG conversions occupy a narrow commercial niche where fleet managers chase fuel savings over the vehicle’s remaining life. The Canadian used car industry also sees rising interest in plug-in hybrids as corporate sustainability mandates push companies to green their grey-fleet purchases. Residual-value risk for full EVs continues to hinge on battery performance; brands that publish detailed battery-health metrics during resale command price premiums. Meanwhile, dealers establish specialized reconditioning lines for high-voltage systems, opening ancillary profit streams.

By Sales Channel: Digital Transformation Accelerates

Digital classified portals recorded 54.06% share in 2024 and serve as the primary discovery point for the Canadian used car market. These sites monetize data through premium listings, financing referrals, and ancillary insurance products. Pure-play e-retailers, though still sub-scale, are expected to post a 25.5% CAGR through 2030 as logistics networks mature and consumers grow comfortable with sight-unseen purchases. OEM-certified stores seek to protect brand standards online, yet franchise agreements and limited used-inventory volumes restrain expansion pace.
Offline channels pivot to experience-centric roles, offering test drives, trade-in appraisals, and loan originations that require wet signatures in certain provinces. Digital auction platforms also gain traction among dealers, lowering transport costs by broadening national bidding pools. The rise of hybrid click-and-collect models demonstrates that most consumers still prefer a brief physical touchpoint before finalizing a high-ticket purchase, suggesting enduring relevance for brick-and-mortar assets when seamlessly integrated into online journeys.

Geography Analysis

Ontario and Quebec account for about 60% of transactions, reflecting population density, higher vehicle turnover, and robust regulatory frameworks such as OMVIC’s compulsory disclosure code. Ontario’s organized dealer penetration outpaces other regions, and its large immigrant population supports diverse vehicle mix, including compact imports. Quebec’s bilingual environment fosters local platforms like Otogo that deliver French-language interfaces and leverage provincial EV rebates to accelerate used battery-car sales. British Columbia boasts the country’s highest average used-vehicle price at CAD 41,811 (USD 30,800) because affluent buyers favor late-model SUVs and electric crossovers.
Alberta’s energy-driven economy skews demand toward pickups and large SUVs, and cyclical oil prices create pronounced swings in inventory turnover. The province’s Vehicle Odometer Rollback Program tightens compliance, reducing fraud risk and encouraging dealer investment in certification tools. Saskatchewan and Manitoba reflect smaller, price-sensitive markets where trucks dominate, and long travel distances sustain durable vehicle preferences. Atlantic Canada’s geographic isolation historically protected local dealerships, yet nationwide portals now penetrate the region, eroding legacy margins.
The federal 2035 ZEV sales mandate will magnify regional disparities in used-EV supply. Early-adopter provinces amass deeper secondary-market inventories, giving them a head start in battery-health-service ecosystems. Cross-border arbitrage remains limited because residency proof is required to claim provincial rebates, although some consumers exploit relocation loopholes. Harmonization of digital transfer protocols is progressing, but varying tax rates and lien documentation standards still complicate multi-province transactions. Over the forecast horizon, infrastructure rollout and policy alignment are expected to narrow these regional gaps.

Competitive Landscape

The top players in the Canadian used car market include AutoScout24/AutoTrader.ca, AutoCanada, HGregoire, Clutch, and CARFAX Canada. Scale allows these firms to integrate data analytics across sourcing, pricing, and F&I, producing cost advantages that smaller independents struggle to replicate. AutoScout24’s entry via TRADER acquisition unites marketplace traffic with dealer management systems, hinting at bundled software-as-a-service offerings that could lock in clients. AutoCanada continues to divest itself of under-performing rooftops to release capital for omnichannel initiatives and CPO expansion.
Technology is the primary competitive lever. CARFAX Canada’s VIN Fraud Check tool highlights the arms race in data-driven trust enhancers, compelling rivals to integrate similar antifraud layers or risk credibility loss. Clutch differentiates on home delivery and no-haggle pricing, leveraging its funding to build logistics hubs. HGregoire invests in AI-driven lead-scoring to reduce customer acquisition costs and shorten negotiation cycles. White-space opportunities persist in rural servicing, specialized EV inspection, and subprime lending, where concentration remains low.

M&A activity likely continues as global classifieds groups seek North American exposure and domestic dealers acquire specialized independents to access inventory niches. Regulatory momentum toward disclosure standardization favors well-capitalized incumbents that can absorb compliance costs, suggesting gradual consolidation but not outright dominance due to Canada’s vast geography and provincial diversity.

Recent Industry Developments

• November 2024: AutoCanada completed the sale of Okanagan Chrysler to streamline its portfolio and reduce leverage.
• September 2024: AutoCanada restructured RightRide, shuttering seven stores and shifting to an inventory-light model targeting credit-challenged buyers.
• August 2024: AutoScout24 finalized its acquisition of TRADER Corporation, bringing 26 million monthly visits under a unified platform.

Canada used car market size, share, Trends & Industry Analysis – 2030. Canada Used Car Market Size, Share, Trends & Industry Analysis – 2030. (n.d.-a). https://www.mordorintelligence.com/industry-reports/canada-used-car-market

Phillips, T., Canadian Auto Dealer, dealer, C. auto, Phillips, T., & Canadian Auto Dealer. (2025, June 4). Used vehicle market sees slight increase in pricing. Canadian Auto Dealer. https://canadianautodealer.ca/2025/06/used-vehicle-market-sees-slight-increase-in-pricing/

Prices are slightly up, though still down, as the Canadian used vehicle wholesale market saw a decline of -0.18% in pricing for the week ending on May 31. That’s up from the prior week’s -0.23%, though within reach — according to Canadian Black Book.

Car segment prices decreased by -0.14% (compared to -0.23 the previous week), while the truck/SUV segments were down by -0.21% (compared to -0.22 a week earlier). The largest decline in the car segments came from sub-compact cars. For trucks/SUVs, it was sub-compact luxury crossovers/SUVs.

“The Canadian market experienced a slight increase in pricing, with a decline less pronounced than in its prior week… Just under 23% of the market segments experienced an average value change of more than ±$100,” said CBB in its latest Market Update. “Supply has remained high in comparison to prior weeks; however upstream channels continue to gain early access.”

In the car category, segments with the largest depreciations included sub-compact cars (-0.64%), sports cars (-0.33%), near-luxury cars (-0.20%), and mid-size cars (-0.19%). Full-size cars experienced an increase (+0.40%).

For trucks/SUVs, segments with the largest declines were sub-compact luxury crossovers (-0.80%), compact vans (-0.58%), full-size vans (-0.43%), and minivans (-0.30%). Full-size crossovers/SUVs (+0.06%) and small pickups managed an increase (+0.04%).

The average listing price for used vehicles is slightly down; the 14-day moving average was at $38,300, based on around 220,000 used vehicles listed for sale on Canadian dealer lots.

Phillips, T., Canadian Auto Dealer, dealer, C. auto, Phillips, T., & Canadian Auto Dealer. (2025, June 4). Used vehicle market sees slight increase in pricing. Canadian Auto Dealer. https://canadianautodealer.ca/2025/06/used-vehicle-market-sees-slight-increase-in-pricing/

The average listed price for a used vehicle in Canada climbed to $37,900 at the end of April, a significant 9-percent increase from the $34,750 recorded at the beginning of that month.

These figures come from the Canadian Black Book, which uses a 14-day rolling average to track the market. According to Daniel Ross, the outlet’s senior manager of industry analysis, the surge in pricing is due to sustained demand as Canadian dealers anticipate expected price increases on new vehicles.

And those increases, of course, are the expected consequence of the U.S. auto tariffs and Canadian retaliatory measures implemented in April.

Wholesale market: Quiet but stable
Unlike the retail price surge, the wholesale market remained stable in April. Increases observed in the light truck segments were offset by decreases in passenger cars. However, Daniel Ross emphasizes that the absence of a decrease is, in itself, excellent news, in a context where the wholesale market normally depreciates weekly.

Trade war: Cascading repercussions
Growing demand for used vehicles is not a surprise. Many analysts predicted that if American tariffs were implemented, many buyers would turn away from new vehicles.

The AutoTrader.ca outlet confirms that activity in the used car market remained “very hot” throughout April.

We know that the used car market was already under pressure since the pandemic, with limited supply. The arrival of buyers deterred from new cars due to price increases risks amplifying the strain on inventory.

An AutoTrader analyst adds, “Current inventories of new vehicles are temporarily protecting Canadian consumers. But this protection is limited in time.”

A short grace period
James Hamilton, managing director of the Used Car Dealers Association of Ontario, agrees. He believes that the reprieve offered by current inventories will be brief.

“Once these vehicles are sold, prepare for sticker shock on new vehicle prices.”

An increase in new car prices will create cascading pressure on the used car market, both on prices and inventory.

Exports under pressure
In recent years, around 300,000 to 400,000 Canadian used vehicles were exported to the U.S. each year — a tenth of the market, according to AutoTrader. Those exports were driven by a favourable exchange rate for Americans.

But the new tariffs—which affect both new and used vehicles—are disrupting the normal dynamic. Daniel Ross notes that American buyers have slowed their pace at Canadian auctions, adopting a more strategic approach, focusing on trucks, sports cars and luxury models.

Good news for Canadians?
A decrease in exports logically means that more used vehicles — particularly recent models from 1 to 5 years old — will remain in Canada. That could stabilize, or even reduce prices here.

The rapid price increase in April occurs within a complex and volatile commercial context. Dealers are seeking to adapt to a new tariff reality, while consumers will need to keep an eye out to avoid surprises in both the new and used car markets.

Charette, B. (2025a, May 20). Used vehicle prices rose by 9 percent in Canada in April: Car news: Auto123. auto123.com. https://www.auto123.com/en/news/used-vehicle-pricing-increased-canada-april-tariffs/72777/

Strong March in advance of tariffs

Spurred by the threat of looming tariffs, we observed an active automotive market in March. AutoTrader.ca saw an uptick in user activity: visits and engagement with listings both for new and used vehicles were up substantially and car shoppers – compared with the pretariff period and same time last year – have been sending more sales inquiries to dealers and private sellers across all our platforms.

Canadian car shoppers rushed into the new car market while inventory was available and before prices could rise. And, as our research showed in early February, many used car buyers accelerated their purchases, while some new car shoppers switched to used vehicles in anticipation of price increases.

Unseasonal uptick in used car prices

Typically, what we see during ‘normal’ times, is used vehicles start with an established base price and decline throughout the year. March marks the start of the spring buying season and usually brings more buyers into the market with increased price competition. For example, in 2019 (the last ‘normal’ year), used car prices dropped 0.7 per cent in March month over month; in 2024, they were down 2.1 per cent.

This year, however, the market saw a slight uptick – a 0.3 per cent increase to $36,823 – driven by tariff-related demand and expectations of pandemic-like price surges.

More buyers entered the market and some shifted from new to used vehicles. AutoTrader has a feature that monitors price drops for vehicle listings over time and our analysis of it shows 23-per-cent fewer listings with price reductions in March alone. This trend has already continued well into April.

A silver lining for used car inventory

AutoTrader estimates 1.5 million fewer new cars were sold between 2020 and 2023, which is now affecting the used market, as those vehicles simply never entered the buy/sell pool.

The weak Canadian dollar has also led to more used vehicles being exported to the United States. An AutoTrader analysis shows a negative correlation between used car exports and the strength of the Canadian dollar: when the dollar is weak, more cars head south of the border. Now, with tariffs in place on both new and used vehicles, there’s a potential silver lining: fewer cars will be exported, allowing for more used vehicle inventory to stay in Canada. This could help ease supply constraints and relieve some pricing pressure for Canadian buyers.

New car inventory: healthy supply, for now

New car supply is relatively healthy, with 67 days’ worth of inventory (60 days is considered ‘healthy’ by industry standard). This buffer likely contributes to why new car prices have remained flat so far in 2025, though it’s not by a significant margin.

It’s also important to note that the 67-day figure is an average: some brands have more than 100 days of supply, while others have less than 30 days, so we may see more fluctuation in months to come.

What’s next?

With so much uncertainty around tariffs, it’s difficult to predict exactly what will happen next. For now, the industry outlook remains similar to what it was before tariffs. If this is a short-term disruption, the market – especially for new cars – has enough supply to absorb some volatility. However, used car supply is more challenged and demand is on the rise, which is why we’ve already seen some price movement.

Sales forecasts vary widely, so rather than wait to speculate, we suggest that if Canadian car shoppers are active in the market and have found the right vehicle, that they act promptly to secure it.

Resilience in uncertain times

As we face these recent tariffs, it’s worth remembering that the Canadian automotive market has weathered storms before. We endured the 2008 global financial crisis and navigated through the pandemic disruption earlier this decade, and adapted each time. While today’s volatility is challenging, it’s also an opportunity to learn and respond. We remain confident in our industry’s strength and resilience – and in Canadians’ determination to move forward together, no matter what the road ahead brings.

Akyurek, B. (2025, May 6). How tariffs are Shaping Canada’s automotive market so far. The Globe and Mail. https://www.theglobeandmail.com/drive/mobility/article-how-tariffs-are-shaping-canadas-automotive-market-so-far/

CARFAX Canada launched a new tool called VIN Fraud Check that alerts auto dealers if a car’s Vehicle Identification Number contains data pointing to potential fraud, or if it has been reported stolen in North America. 

In a news release, the company said its new tool will now be available to dealers who access Vehicle History Reports through the CARFAX Canada dealer portal, at no additional charge. The project initiative was accelerated thanks to feedback gathered during an industry roundtable hosted by the Province of Ontario.

“By working closely with vehicle dealers, local police, and the provincial government, we’re equipping Canadian dealers with the tools they need to detect and avoid potential VIN fraud,” said Shawn Vording, President of CARFAX Canada, in a statement. 

During the roundtable discussion, government representatives and industry leaders pointed to the need to address rising auto fraud by implementing the new initiatives — including data, technology, and collaboration. In a statement, Jeff Hill, Deputy Chief of Regional Operations of the Halton Regional Police Service, said technologies like VIN Fraud Check are “instrumental in helping police agencies and dealers to identify vehicles being sold fraudulently.”

“Auto theft remains a serious crime in Halton region and beyond,” he said. “It is largely driven by organized crime groups that stop at nothing to evade police detection, including VIN cloning to resell stolen vehicles for profit to fuel additional criminal activities.”

Technologies like VIN Fraud Check, he said, help remove vehicles being sold fraudulently from the pipeline and help keep Canadians safe.

Canadian Auto Dealer, dealer, C. auto, & Canadian Auto Dealer. (2025, April 24). Carfax Canada launches Vin Fraud Check Tool for dealers. Canadian Auto Dealer. https://canadianautodealer.ca/2025/04/carfax-canada-launches-vin-fraud-check-tool-for-dealers/

The dust is starting to settle from Donald Trump’s recent tariff announcements, so this might be a good time to look at the likely impacts on the Canadian automotive sector, both in terms of manufacturing and sales. Spoiler alert: I am actually quite optimistic for Canadian car-makers and consumers.

Let’s start with a quick recap. The U.S. has applied an overall 25% tariff on Canadian goods, but has exempted, for now, most USMCA-qualifying products, including vehicles. However, light-duty vehicles are subject to a new, separate 25% tariff that is applied to all countries. The rules governing this automotive tariff provide that the applied rate of duty can be reduced by the value of the U.S. parts content in the vehicle, if that U.S. content exceeds 20% (the 20% threshold effectively eliminates non-USMCA vehicles from obtaining a lower rate of duty). By subtracting the value of U.S. parts and components in the vehicle, you lower its total value, and effectively reduce the applied rate of U.S. duty.

Canada has responded with a 25% duty of its own (often referred to as either a “surtax” or a “counter-tariff”) on U.S.-assembled vehicles. In a mirror image to the U.S., Canada will allow importers to deduct the value of any Canadian and Mexican content, effectively lowering the rate of duty on U.S.-built vehicles. For USMCA-qualifying vehicles, importers may choose to deduct the full value of the U.S. content with detailed proof of origin; or take a streamlined approach and simply claim a 15% reduction.

As a result, the effective applied rate of duty on USMCA vehicles imported from the U.S. will be 21.25%, less any further adjustment for proven U.S. content above 15%. For vehicles assembled in the U.S. that do not meet the USMCA rules, the full 25% duty would apply.

As a result, the effective applied rate of duty on USMCA vehicles imported from the U.S. will be 21.25%, less any further adjustment for proven U.S. content above 15%. For vehicles assembled in the U.S. that do not meet the USMCA rules, the full 25% duty would apply.

 

While temporarily exempting USMCA-qualifying parts from tariffs, the U.S. does intend to apply duty to the non-U.S. content in parts. By contrast, Canada is not proposing to put duty on parts, and is in the process of establishing a duty-remission program for Canadian automakers. That program will allow companies that build cars in Canada to avoid paying the surtax on the U.S.-built vehicles they import to Canada.

So, what does all of that mean?

First of all, U.S. consumers will not be faced with a sudden 25% price increase on vehicles imported from Canada. As noted above, the dutiable value of cars imported to the U.S. can be reduced by the amount of U.S. content in the vehicle. So if, for example, 50% of the content in a Canadian-assembled vehicle is American, the vehicle’s value for duty would be reduced by half before applying the 25% tariff. That would leave the U.S. importer of the vehicle paying an effective duty rate of 12.5%. All Canadian-made vehicles incorporate U.S. content, so they will be less impacted by tariffs than imports from Europe, Japan, or Korea.

Similarly, if the U.S. goes ahead with tariffs on the non-U.S. content in all imported parts, Canadian parts-makers may also enjoy a comparative advantage against their European or Asian competitors. Canadian parts often incorporate some U.S. content, too, so that will also mean lower effective rates of duty. The final form of those rules is still being worked out, but the takeaway is that, for both parts and vehicles, Canadian manufacturing operations will be better positioned to continue to do business in the U.S. than their European or Asian competitors.

Just as importantly, there will be no change to the existing competitive balance between Canada and Mexico because we are both covered by the same rules. Canada’s overall competitive position has experienced a setback, but it might not be the disaster many Canadians fear.

onsider this: previously, Canadian-assembled vehicles held a 2.5% advantage over European- or Japanese-made vehicles, thanks to the 0% rate of duty under the USMCA versus the general tariff of 2.5% on vehicles from other countries. Korean vehicles were on par with Canadian vehicles because Korea and the U.S. also had a free-trade deal.

So, returning to the scenario where a Canadian-built vehicle has 50% U.S. content, Canada’s applied-duty-rate advantage under the Trump tariffs increases from 2.5% to 12.5% against European and Japanese competitors. Against Korean-made vehicles, that advantage rises from 0% to 12.5%. Of course, U.S. content in Canadian vehicles varies by model, but our comparative advantage against all but American-made vehicles should increase under Trump’s tariffs.

Canada’s decision to not follow the U.S. in applying tariffs on auto parts is also significant. Cars built in the U.S. will see increased costs because of tariffs on imported parts. Those additional costs will be baked in whether the vehicles are sold in the U.S. or exported to Canada. By contrast, since Prime Minister Carney decided to not apply tariffs on imported car parts used by vehicle assembly plants in Canada, Canadian-built cars could actually be cheaper than their American-built counterparts, which would help mitigate the tariff hit were they exported to the U.S.

That doesn’t mean there aren’t new competitive challenges for Canadian-assembled vehicles. The Trump administration intends to incentivize the purchase of American-assembled vehicles through some form of tax deductibility of consumer finance payments. The details of that plan have yet to be worked out, but they would offer a significant incentive for Americans to buy American.

Speaking of missing details, the Canadian government has announced plans for a duty-remission program for Canadian vehicle manufacturers, but has not published the terms and conditions. At a minimum, we might expect that Canadian vehicle-makers might be able to be refunded any duties they pay on vehicles imported from the United States.

 

Canada’s applied-duty-rate advantage under the Trump tariffs increases from 2.5% to 12.5% against European and Japanese competitors; against Korean-made vehicles, it rises from 0% to 12.5%

Why impose duties on U.S.-made cars only to refund them later? By giving automakers who build cars in Canada access to duty-free imports, you are anchoring Canadian production. If production stays in Canada, manufacturers can import duty-free from the U.S. If Canadian production stops, the new counter-tariff applies. There is no impact on federal spending because the manufacturer just gets a waiver or refund of the new surcharge.

How do the numbers work out? More back-of-the-napkin math: Canadian plants produced about 1.3 million vehicles last year, with roughly 80% of Canadian production exported to the U.S. In any given year, about half of the vehicles sold in Canada are imported from the United States. Sales of new vehicles accounted for roughly 1.92 million units last year, according to Statistics Canada. So, if the normal ratios held in 2024, that would mean we imported around 960,000 vehicles from the U.S.; and exported just over a million vehicles in return. From a Canadian business perspective, manufacturers’ duty-remission savings on the Canadian side of the border would largely offset the additional cost of exporting vehicles to the United States.

By that logic, it seems jobs and investment in the automotive assembly sector are relatively secure. The tariff impact on parts companies will be partially mitigated through reduced duties on imported vehicles containing Canadian parts. In addition, the government has promised further funding to the sector which may be covered in whole or in part by any monies generated by the surcharge on U.S. parts and vehicles. So, there is reason for optimism that Canada will continue to have an auto-manufacturing sector on the other side of this dispute.

But what about consumers? Canadian-made vehicles will experience little or no tariff impact in Canada. Imports from the U.S. under the duty-remission program for manufacturers will be duty-free, requiring no price increase. Imports from Mexico that comply with the USMCA rules of origin, even if they contain very high percentages of U.S. parts, will also remain duty-free. Vehicles imported from Europe and from Japan and Korea will be unaffected, and benefit from Canada’s existing free-trade agreements with those partners.

Only U.S.-made vehicles that are imported by companies that have no manufacturing footprint in Canada, or any U.S. vehicle that does not meet the USMCA rules of origin, will incur new costs because of the Canadian counter-tariffs.

Companies like Tesla that have no Canadian manufacturing base or can’t easily import from a third country (Tesla formerly supplied Canada with Chinese-made Models 3 and Y, until Canada put a surtax on Chinese EVs) would be hit by the new Canadian surtax. However, any company would retain the option of swapping vehicle imports to a non-U.S. source, taking advantage of lower duty rates under Canada’s other free-trade deals. So, for example, a German manufacturer might choose to supply Canada with vehicles made in Germany rather than the U.S. to avoid paying the surtax.

 

When you put this all together, very few models will be impacted by new tariffs. I also expect that companies will plan their model lineups and consumer incentives in a way that steers consumers away from those impacted models. And, rather than delivering a 25% increase on any individual model, automakers are likely to spread price increases across their lineup in a way that minimizes consumer sticker-shock.

There will be companies and models, dealerships and workers, at the edges of this trade dispute who will be hurt, but the damage will be more contained and manageable than most people initially feared.

Tariffs will introduce new variables into the market. The new-car market in Canada last year was still smaller than it was in 2018. So, while Canada’s population has surged in recent years, it seems the rapid increase in vehicle transaction prices has kept some Canadians out of the market.

 

There may be a silver lining in the tariff dark cloud. It is estimated that roughly 25% of Canadian used cars have traditionally been exported to the U.S. But since it is difficult to prove that used vehicles comply with USMCA rules of origin, tariff costs on those used-car exports will jump from 2.5% to 25% on cars and SUVs under the new automotive tariffs. Tariffs on used pickup trucks could reach 50%. As a result, fewer used vehicles will be exported.

A growing supply of used cars might allow more Canadians to get behind the wheel of new-to-them vehicles at more competitive prices. And in the new-car space, vehicles from European or Asian makers that are priced out of the U.S. market by tariffs might now find their way to Canada.

Who knows? When all is said and done, the only ones hurting from the recent U.S. tariff manoeuvres may be Americans, and you just might find a good deal if you keep a keen eye on the market and are prepared to act quickly.

Stephen Beatty: Dark clouds of auto tariffs have silver linings | driving. (n.d.). https://driving.ca/column/stephen-beatty-tariff-canada-automotive-trade-advantage-impact

There are many uncertainties about how United States President Donald Trump’s tariffs will affect the auto industry, but sector insiders say one thing is all but certain: the price to buy a vehicle is about to go up and may already be rising.

“The first economic effect we’ll see, and it’s a major one, is on car prices,” Charles Bernard, lead economist at the Canadian Automobile Dealers Association, said. “And our car prices aren’t necessarily cheap right now at the moment, so it won’t help something that was already a problem.”

It all comes as a gut punch to some who believed the auto industry was just returning to a healthy state.

The auto sector had been hit hard by inflation, with the average price of a new car in Canada rising 43.2 per cent between 2019 and 2025, and used car prices rose 39.5 per cent during the same timeframe, according to data from AutoTrader.com Inc., the vehicle marketplace. But in 2024, the average used car price declined by 12.1 per cent.

Exactly how much car prices could rise again thanks to the latest tariffs is difficult to predict. J.D. Power earlier this month estimated that 25 per cent U.S. tariffs and counter-tariffs could add $6,000 to the price of a new vehicle, which is a 9.2 per cent increase given that the average new vehicle in Canada costs $64,600, according to Autotrader.

But nearly everyone agrees that estimate is only a rough guess and there are many factors at play.

Just two months into office, the Trump administration has unleashed a barrage of tariffs, threatened tariffs and reprieves that even economists are having a hard time keeping track of, let alone making sense of their combined impacts on the auto sector.

At the beginning of March, the U.S. enacted 25 per cent tariffs on all Canadian goods that are not compliant with the Canada-United-States-Mexico Agreement (CUSMA), which could affect some auto parts manufactured here, though most vehicles are believed to be compliant. It also levied 25 per cent tariffs on Canadian steel and aluminum, both of which are large inputs for vehicles.

Trump has further signalled that he plans to enact 25 per cent tariffs on April 2 on autos and additional 25 per cent “reciprocal“ tariffs on a sweeping set of goods, which would in effect match any costs that U.S. exporters face, such as goods and services taxes, that are not generally considered as trade duties.

Analysts at S&P Global Mobility are predicting a 50 per cent probability of there being “an extended disruption” — one that lasts 16 weeks to 20 weeks — when vehicles that are more exposed to tariffs will slow or cease production.

“Consumers will face rising costs on all goods, reducing available funds and willingness and ability for purchasing durable goods,” Stephanie Brinley, associate director of autoIntelligence at S&P, said in a note on March 12. “We expect product development delays to have lasting effects into future years.”

She said one “more dire scenario,” in which tariffs on vehicles produced in Canada and Mexico are integrated into the long-term trade structure on a permanent basis, has a 20 per cent probability of happening. Although this could increase U.S. manufacturing, she said it would increase costs and likely lead to a decline in vehicle sales.

Brinley gives a 30 per cent probability for a “quick resolution” and tariffs disappearing in a month or less, but this would still lead to lower production due to supply chain issues and border gridlock.

Eventually, many economists say the tariffs could lead to inflation or a recession, which will affect interest rates and consumer behaviour, including whether to purchase a vehicle.

“With these tariffs in place, we would expect to see vehicle sales in these countries contract substantially,” Andrew Foran, an economist at TD Economics, said in a Jan. 28 note.

Even 10 per cent tariffs could lead to a sales decline of light vehicles in Canada of around eight per cent, while a 25 per cent tariff could push the decline to around 13 per cent, he said.

Since tariffs raise prices for consumers and businesses, people will have less money to spend and economic growth will weaken, Foran said. That leads to higher unemployment and stagflation, which is weak growth and high inflation combined.

“We were so close to normalcy,” Baris Akyurek, vice-president of insights and intelligence at AutoTrader, said. “Everything was coming down, the demand was there, the supply was there, we were really close to normalcy and then this stuff happened.”

He said used car prices are an important indicator because it’s the marketplace that absorbs demand when new car prices rise.

Typically, he said, used car prices start the year high and then decline, but used car prices have risen 0.4 per cent so far in March.

“It’s not by much yet, and it’s only 16 days of data, so this is not conclusive, but prices had been coming down,” Akyurek said.

On the other hand, the average price of a new vehicle declined by 0.2 per cent.

But he said there are other troubling signs in the marketplace. Sellers have stopped dropping their prices as often this year, with a 22 per cent year-over-year decline in the number of price drops amongst all vehicles listed on AutoTrader.

Some dealerships in Canada are building up inventory now, which will provide a cushion against price increases for a period of time since those vehicles will not be affected by tariffs if they are imported before they go into effect.

“It’s pretty clear what’s going on,” said Akyruek, who added that rises in price at this point “are inevitable.”

Auto prices already rising as tariffs loom | financial post. (n.d.). https://financialpost.com/transportation/autos/auto-prices-already-rising-tariffs-loom

Thanks to the trade war, your next vehicle could be used. 

Even then, the savings might not be what you expect. 

As indiscriminate U.S. tariffs threaten to shut down the North American auto industry, manufacturers of new cars will be the first to be hit. That’s expected to drive more buyers to the used-car market, complicating what many already find to be a fraught spending decision. 

New car economics: The Michigan consultancy Anderson Economic Group estimated that new car prices could go up by US$12,000 if the U.S. implements 25 per cent tariffs on Canada and Mexico and an additional 10 per cent on China. That’s because many car parts would be tariffed multiple times before they ended up in assembled vehicles. What’s more, some suppliers and car plants may slow or halt production because they’re unable to pay the costs, reducing the supply of vehicles over time. 

“No matter how much the tariff will be, it is not possible to move production back to the U.S. overnight. So most likely, either production will have to shut down, or they have to continue under tariffs and be hit,” said Tu Nguyen, an economist at the tax and consulting firm RSM Canada. 

Either way, prices of new cars go up.

Used car economics: As of this writing, it wasn’t clear whether used cars would fall under the U.S. tariffs. But a recent analysis by the Canadian Black Book found that, either way, Canadians will gravitate to second-hand vehicles.

If used cars are tariffed when crossing the border, the price gap between new and second-hand ones will widen. That’s because fewer U.S. buyers would be bidding at Canadian car auctions due to the additional expense of bringing cars across the border. Canadians would have more used vehicles to choose from. 

That’s a happy scenario for buyers, but there are others in the Black Book analysis where used car prices rise. In one, Canadians react to higher new-vehicle prices by migrating en masse to the pre-owned market, and demand eclipses supply. In another, the tariffs don’t apply to second-hand autos, prompting American bidders to snap up used Canadian vehicles at favourable exchange rates, driving up prices at auctions. 

“Used cars—[that] is the question mark in terms of what will happen,” said Jesus Ballesteros, who advises manufacturers and other businesses as a partner at BDO Canada. Regardless, dealers are turning to second-hand cars as a revenue stream. To the extent that dealers can prepare at all, Ballesteros said, having “a good used car operation” will dampen the impact of tariffs. 

Chaos at the dealership: Tariffs aren’t yet in effect, but dealers are already planning for the ensuing chaos. For starters, they’re on high alert for fraud. Insurance company Aviva expects a tighter U.S.-Canadian border to increase the probability that Canadians accidentally buy stolen vehicles, because thieves will flip them domestically rather than risk trying to get them into the U.S.. Among the other unknowns: how a trade war will affect interest rates; the costs of repairs using tariffed parts; and the economic fluctuations tariffs may cause in local markets, noted Charles Bernard, lead economist at the Canadian Automobile Dealers Association. 

Sean Mactavish, CEO of Autozen, a Vancouver-based tech company that helps car owners sell to dealerships, is among those expecting a surge in demand for second-hand vehicles. How the prices shake out depends on how long people delay purchases amid economic uncertainty, he noted. He’d like to see governments quickly lift interprovincial trade barriers for car sales to make it easier for dealers to find the vehicles and workers they need within Canada. 

In the meantime, Mactavish is navigating the same unknowns as everyone. How great will the impacts be? Which market segments will get hit hardest? “I’ve talked to other leaders and dealerships, and we’re all asking the same questions,” he said, “trying to get answers.”  

Balakrishnan, A. (2025, March 13). Why even used cars could get more expensive in a trade war. The Logic. https://thelogic.co/news/shift/used-cars-auto-tariff-trade-war/