Canadian vehicles sales performed well in the first half of 2025. But the Canadian automotive market could hit a wall in the second half, as tariffs imposed by the United States and Canadian retaliatory measures make themselves more fully felt.
According to data from the Automotive News Research & Data Center, 958,214 new vehicles were sold in Canada during the first six months of the year, a 4.3-percent increase compared to the same period in 2024; the second quarter saw a 6.4-percent rise. And average transaction prices continued to climb, reaching $48,900, up from $48,300 last year.
Sales boosted by incentives and attractive financing
According to J.D. Power Canada, sales benefited from generous incentive programmes, with a stable average of $5,500 per vehicle. Additionally, the Bank of Canada's interest rate cuts allowed for the return of 0-percent financing, keeping average monthly payments around $870.
"We are still seeing a lot of well-equipped vehicles leave dealerships, but manufacturers are managing to offer attractive deals,” said Robert Karwel, senior director at J.D. Power.
Compact SUVs compensate for slowdown in full-size pickup trucks
The compact SUV segment continues to grow, despite a cooler market for full-size pickup trucks. This "price shift" within each mainstream segment is maintaining margins, but it could be masking the first signs of a slowdown.
Tariffs about to hit the fan
According to Robert Karwel, the true effects of the tariffs — imposed by the Trump administration on steel, aluminium, certain parts and even assembly — have not yet been fully felt. June marks the beginning of a critical period: "We are just starting to see the repercussions. It's not measurable yet, but it's coming," he says.
Manufacturers will spread the costs of tariffs across several models, while absorbing some of the increases, at least for now.
Less rosy forecasts for the rest of the year
Scotiabank Economics predicts that the pace of sales will slow in the second half. The bank forecasts 1.88 million vehicles sold in 2025, then 1.81 million in 2026, citing weak economic growth, a more fragile labour market, and uncertainty surrounding tariffs and prices.
June up, but fatigue in sight
June sales increased by 5.3 percent, reaching around 178,000 units, according to DesRosiers Automotive Consultants (DAC). However, the seasonally adjusted annual rate (SAAR) fell to 1.81 million, the lowest of the year. "Market momentum is running out of steam after a strong start to the year," explained Andrew King, managing partner at DAC.
Winning… and losing brands
Among the 10 brands that still report monthly:
- • Genesis (+41.3 percent) leads the increase.
- • Acura climbed by 28.7 percent, Lexus by 4.3 percent, Honda by 19.6 percent.
- • Subaru is the only one to record a decline (-4.3 percent).