Ford vehicles parked for sale at a car dealership in Oakville, Ont.Carlos Osorio/Reuters
Canadian vehicle sales have rebounded to close to pre-pandemic highs, but much of the rest of the outlook for North America’s auto industry remains uncertain: Trump tariffs, electric vehicle sales, the future of Canada’s auto sector, and prospects both for Detroit’s Big Three auto makers and for Tesla. Karwel is director of the customer success data and analytics division for Canada at J.D. Power.
1. First, the good news: Canadian vehicle sales peaked at more than two million units in 2017 and are likely to hit 1.8 million this year. Consumer expenditures were more than $60 billion in 2024, he says, “above anything we have seen between 2017 and 2024.”
2. The average price of a new vehicle climbed past $40,000 early in the pandemic and is approaching $50,000. A sharp rise over the past two years was due to “increased vehicle prices combined with a massive drop in incentives, like low APR financing,” Karwel says. On average, prices are still rising slightly—about 1% to 2% a year.
3. The impact of the Trump tariffs and Canadian counter-tariffs is still cloudy, Karwel says. Dealers had inventory at the start, and most vehicles already complied with the USMCA free trade agreement. But vehicles were already getting more expensive. “This will certainly not be a smoking gun. It will just add more complexity and pricing,” he says.
4. Consumers are still lukewarm about EVs. Pure EVs are about 4.5% of the Canadian market, and if you add plug-in hybrids, that rises to about 8%. But Ottawa has removed rebates. “When you make a car $5,000 more expensive overnight, that will certainly negatively impact sales,” Karwel says. “The environment surrounding EVs is highly politicized at the moment.”
5. Karwel declines to discuss the financial prospects of the Big Three. Shares of GM, Ford and Stellantis trade below 10 times earnings, while Tesla’s P/E ratio is still almost 200. But the possible vanishing of Canada’s auto industry is a real fear, he says. “Our domestic market (1.75 million to two million units) is too small to sustain production from multiple original equipment manufacturers.”