The Canadian automotive market started 2025 strongly for both new and used vehicles, with March sales boosted by consumers reacting to anticipated tariffs. While new car inventory has largely recovered to pre-pandemic levels, ongoing uncertainty around tariffs is making long-term forecasting difficult, with potential outcomes ranging from flat sales to a 25% decline this year.

Used vehicle demand remains high, partly due to some buyers shifting from new cars and others accelerating purchases to avoid potential future price hikes. However, used car inventory remains tight and is expected to stay constrained until 2027, which may keep prices elevated.

Affordability has improved from pandemic peaks, with new and used vehicles requiring fewer weeks of average earnings to purchase, though still above pre-pandemic levels. The overall outlook is uncertain and will depend on how tariffs evolve, but current trends signal cautious optimism for both consumers and the industry.

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