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/