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2025 Mid-Year Auto Market Recap: Inventory, Incentives & Insights

Picture of carpages By  carpages  ·  3 minute read

1. New‑Vehicle Sales: Momentum Stalls Amid Trade Headwinds

  • Canada saw 187,000 light‑vehicle sales in May 2025, up about 7.9 % year‑over‑year—but this benefited from one extra selling day and a weak May 2024 for comparison MarkLines.

  • June sales softened, with about 178,000 units sold, up 5.3 % from June 2024—but after adjusting for fewer selling days and a tariff‑driven pull‑ahead in spring, momentum is fading CBT News.

  • Economists forecast total 2025 Canadian light‑vehicle sales around 1.8 million, with a slight dip projected for 2026 MarkLines.

What to expect at the dealership:

  • Traffic may taper post‑spring rush.

  • Watch for consumers delaying purchases as tariff impacts bite.

  • Incentive strategies might be needed to compete.

2. Tariffs & Trade: Still the Big Variable

  • U.S. 25 % tariffs on auto and parts took effect in early April; Canada mirrored with counter‑tariffs. USMCA‑compliant vehicles face a partial exemption CarEdgetricorauto.com+5Reuters+5Car Dealership Guy News+5.

  • GM posted a $1.1 b loss attributed to tariffs, forcing them to shift production toward U.S. plants and absorb costs instead of raising prices The Wall Street Journal.

  • Volkswagen reports that North America vehicle volumes are down ~16 % globally, though global sales remain strong Collision Repair Mag.

  • There remains hope for carve‑outs in trade talks—dealerships should stay alert for policy changes CTVNews.

What to expect at the dealership:

  • MSRP stability for now—but margin pressure.

  • Watch inventory mix and source breakdown (domestic vs. non‑compliant).

  • Potential supply bottlenecks for models built outside North America.

3. Surge in Subcompact & Small Pickup Demand

  • Canadian demand is shifting sharply: subcompact cars jumped 50.5 % and small pickups rose 38.7 % year‑over‑year in H1 2025 fleetinsights.emkay.com.

  • Luxury and mid‑size passenger cars declined sharply (luxury ‑46.9 %, intermediate ‑33.6 %) Wikipedia+1Market Report Analytics+1.

What to expect at the dealership:

  • Realign inventory toward high‑growth segments.

  • Highlight models like Mitsubishi Mirage, Nissan Versa, Fiat 500E.

  • Consider promoting affordability and incentives tied to small vehicles.

4. Used Car Market: High Prices, Fast Turnover

What to expect at the dealership:

  • Opportunity to capture price-maintaining trades; leverage strong used values.

  • Fast turnover means leaner used inventory—plan restocking accordingly.

  • Watch entry-level used market (< C$25k), in high demand but thin supply.

5. EVs & Policy: Mixed Signals for Zero Emission Vehicles

  • Canada’s EV mandate now requires 20 % zero‑emission vehicle (ZEV) share by 2026, rising to 60 % by 2030 WikipediaPolitico.

  • EVs represented just 8.7 % of new vehicle sales in May, projected to approach 10 % in 2025—but automakers worry the target won’t be met PoliticoAuto Service World.

  • Tesla’s share cratered in Québec, with 85 % drop in new registrations in Q1 2025 amid rebate suspensions and public backlash Business InsiderPolitico.

What to expect at the dealership:

  • EV inventory and promotion strategies must adapt regionally.

  • Collaborate on rebate claims—some provinces paused or revised programs.

  • Prepare for increasing regulatory complexity and compliance costs.

6. Consumer Behavior: Digital Spend & Intent Signals

  • 27 % of Canadians plan to buy a vehicle within six months, with 18 % targeting new based on recent intention data tricorauto.comAuto Service World.

  • Online touchpoints are now core: 60 % consider buying entirely online, and ~85‑88 % want a mix of digital and in-person transactional steps Auto Service World.

What to expect at the dealership:

  • Enhancing online lead capture, virtual tours, pre-approval and digital trade tools is critical.

  • Think hybrid sales models: build‑to‑order, online quotations, home test drives Transport Canada.

What Canadian Dealers Should Prepare For

Area Key Focus
Inventory Shift toward sub‑compacts, trucks; monitor tariff‑affected models
Pricing Maintain tight margin control; evaluate used pricing trends weekly
EV Strategy Stay current on provincial rebate changes and mandate compliance
Digital Sales Invest in online tools and multi-channel consumer journeys
Training Train staff on tariff impact discussions, EV filing, used‑car appraisal

✅ Final Thoughts for Dealership Teams

Canadian automotive retail is navigating a volatile blend of trade uncertainty, evolving consumer behavior, and regulatory shifts. While new‑vehicle growth may cool off, strong used inventory pricing and demand for value-focused segments offer opportunity. Dealerships that adapt quickly—through inventory flexibility, digital sophistication, and astute pricing intelligence—will be best positioned for success in the months ahead.