Auto industry executives and analysts used gentle words including “uncertain,” “challenging” and “interesting” to describe the outlook for 2025, but one gets the sense that everyone is optimistically putting a brave face on what could be a catastrophic year for the Canadian auto industry if U.S. President Donald Trump makes good on his threat of a 25-per-cent tariff on Canadian imports.
Nevertheless, the show must go on even as the industry waits for the tariff hammer to fall (or not). Speaking in and around the recent Canadian International AutoShow in Toronto, car company executives and industry analysts raised many other issues they’re tracking for 2025. These run the gamut from questions of affordability to sales mandates to electric vehicle rebates, shifting consumer tastes, sustainable materials and used vehicle prices.
Here’s what auto industry insiders had to say about the year ahead:
Jeff Hines, president and chief executive officer of Stellantis Canada, on the sales outlook for 2025 and affordability driving shifting consumer preferences:
Prognosis for 2025? Optimistic. It certainly is going to have its challenges. Tariffs are one of many, but, absent that, our expectation is for a positive ‘25, with sales at least flat to last year, if not a little bit of growth.
I don’t think it’s a turning point, but we do see a little bit of customer preference changing. Whether it’s a car or an SUV, smaller and more affordable, that’s where the growth is. Now, truck sales are still very solid, but the truck business was on an upward trajectory in the last 10 years. It was really, really great for the car companies. Now we’re seeing trucks flatten out a little bit, and the growth is coming in smaller utility vehicles. I think that’s really a sign of customers needing to find what’s affordable for them.
The other part is, what’s the plan going to be for federal and provincial support on EVs moving forward? We had up to $12,000 in government rebates in certain areas of Canada in December, and fast forward 30 days it’s zero. Going back to the affordability question, that’s a huge difference for a family. Now, we’re a firm believer that EVs are not going anywhere. They’re here to stay, but without any federal or provincial support, the adoption is going to slow significantly.
Andrew King, managing partner at DesRosiers Automotive Consultants Inc., on tariffs and ZEV mandates:
Trump tariffs are obviously the biggest concern by far. It’s hard to overstate the implications this will have for the Canadian industry and market. The potential U.S. tariffs are many orders of magnitude more important than anything else.
On Zero Emission Vehicles (ZEV) sales mandates: will the governments of Quebec and B.C. lower their ZEV mandates? The provincial mandates in those two provinces are likely unachievable anyway unless vehicle companies aggressively limit gas-powered vehicle sales. (Quebec’s latest proposal aims to have ZEVs account for 85 per cent of new vehicles sold in 2030, while B.C. is targeting 90 per cent for 2030.) With political changes at the Federal level in the U.S., and maybe in Canada, it will be interesting to see how the provinces react.
On population: If, and it is a very big if, the Federal Government does what it says then the Canadian population may fall this year — not something that has been witnessed in the years for which solid auto sales data exists. Auto sales per million people in Canada are already 20 per cent below the 2017 peak, as the population has exploded but auto sales have not. What happens with Canada’s population will have significant long-term implications for the economy as a whole, and thus obviously the auto market.
Matt Wilson, general manager of luxury car dealership Grand Touring Automobiles Uptown in Vaughan, Ont., on light at the end of the tunnel:
It’s going to be a very interesting year. Last year was kind of a transitional year, post-COVID and the car market settled down a little bit, especially on the high end. The federal luxury tax (introduced in 2022 on cars over $100,000) also had an impact over the last couple years. So there was a lot – from an economic standpoint – of dampening impacts for the last couple of years. We are starting to see, with falling interest rates, the market opening up a little more. I think we are starting to see the light at the end of the tunnel.
But then, of course, there’s some political uncertainty in the U.S. and locally. The U.S. tariffs won’t really impact our products – they’re all built in Europe – but, absolutely, tariffs can have a significant impact on our client base. The majority of them are entrepreneurs in some shape or form, and it will impact their businesses.
Erin Crossley, design director of the Cadillac Celestiq, on the customization and the race to find new luxury materials:
Bespoke customization and high-end luxury: if you look at forecasted trends, that’s where they see the growth in automotive, which is really exciting. The fun part, as a designer, is that opportunity to look for the ceiling. Is there one? (The new Cadillac Celestiq starts at $495,000 in Canada._ In segments like this there’s the opportunity to do more, to explore new materials and new ways of making things. A lot of what we’re doing with Celestiq is 3D printing. So, what else can we 3D print?
We’re also looking at a lot at different sustainable materials. In the Sollei concept, we feature a material that’s made from mycelium fibre, so it’s basically a grown material that looks and behaves a lot like leather. Leather will always, I think, feel like a luxury but I think there’s this quest to find the new luxury material.
Matt Girgis, managing director of Volvo Cars Canada, on the electrification glide path and filling the void left by cancelled government rebates:
There are a lot of things on my mind for 2025, starting with the electrification glide path. Fully electric vehicle adoption isn’t happening at the speed at which we originally thought. We’ve had some production disruptions on the EVs, so there are some reasons beyond the cancelled federal rebates on EVs. But, affordability will be a big issue on EVs in the absence of government rebates. To what degree will manufacturers fill the void, covering the cost of lost rebates? To what degree can manufacturers fill the void? Those are big question marks.
For us, it’s a question of adapting, and we see our plug-in hybrid vehicles as a bridge. They’re resonating with Canadians. They’re less exposed to uncertainty around government rebates. About half of the cars that we sell in Canada have a plug, either fully electric or plug-in hybrid; our PHEV sales have, from 2023 to 2024, increased by about 70 per cent year-over-year.
In parallel, we are encouraging the government to participate; we want them to continue the EV rebates.
Brent Smith, director of marketing for Nissan Canada, on affordability and the demise of sedans:
Today, one of the biggest things on the minds of consumers is vehicle affordability. It has a lot to do with the changing vehicle preferences of Canadians. Canadians are looking for all-wheel drive. They’re looking for larger vehicles. They’re looking for utilities and crossovers, all of which are more expensive. And a lot of manufacturers have chosen to leave some of the passenger car segments, which are really the starting point from affordability. At Nissan, we have the least expensive car in Canada based on actual selling price, the Versa sedan, at $23,406.
Kevin Marcotte, director of marketing for BMW Group Canada, on EV incentives and the need to get creative:
Battery electric vehicles typically come at a higher price point. We’ve benefited from government incentives, which are now largely going away. That’s naturally going to hinder demand for BEVs. So, we’re going to have to work harder to make sales.
We look at incentive programs on a month-to-month basis. There are sales support programs (such as discounts or leasing deals) and then there are other programs whereby, for example, consumers get a home installation charging credit. They purchase a BEV and we’ll supplement up to $2,000 for home charger installation. That’s been in the market since October. We’ve seen that it’s working and our customers and retailers are engaging with it. So, we continue to look to a creative and innovative program such as that, versus simply ‘money-in-the-trunk’ discounts. We have to be creative to be affordable, certainly.
Baris Akyurek, vice president of insights and intelligence at AutoTrader Canada, on tariffs and used vehicle prices:
If proposed U.S. tariffs move forward, we expect to see more consumers shifting from new to used vehicles, like what we had experienced during the heights of COVID, which would put added pressure on used vehicle supply potentially driving prices back up.
This is particularly noteworthy because, after years of uncertainty, the used vehicle market had finally been stabilizing. In 2024, used vehicle prices saw a 12.1 per cent annual decline. In January alone, prices were down 5.8 per cent year-over-year. Demand has been improving and inventory is healthy. A couple of ‘normal’ years would have allowed the market to rebalance, but 2025 may introduce new pressures – tariffs – that could disrupt this progress.
The interviews have been edited and condensed.