The Canadian automotive market faces significant challenges in 2025. Inflation and years of price increases are impacting various brands, especially high-end ones. Supply chain disruptions and high demand have kept inventories tight and raised prices. However, some brands and dealers are starting to see loosening and are agreeing to discounts. Here’s an overview of the current market, focusing on key areas and models.
Supply and Demand Challenges
Several factors continue to impact the availability of new vehicles in Canada:
- Parts Shipment Disruptions: Ongoing issues with parts shipments have slowed production.
- Global Market Focus: Manufacturers are prioritizing inventory for larger markets like the U.S., Europe, and China.
- High Immigration Rates: Increased immigration has driven up demand for passenger vehicles.
Truck Inventories
Truck inventories have shown significant of recovery:
- Chevrolet Silverado and GMC Sierra: These models are much more available on dealership lots.
- RAM 1500 and Ford F-150: Availability has improved, but certain trims and configurations may still be hard to find.
Overall, domestic truck inventory is “normalized”. Dealers have inventory and if you are buying or leasing an in-stock model, or advertised as “available” (factory orders not yet arrived) some dealers are giving significant discounts.
Compact SUVs
The compact SUV segment remains highly competitive, with popular models still experiencing some backorders:
- Toyota RAV4 and Honda CR-V: These models are in high demand, with shorter backorder delays compared to six months ago.
- Subaru Forester: Supply is slowly increasing, but some trims may still have extended wait times.
- Nissan Rogue: This model has decent supply, and dealers are willing to be flexible on price.
Luxury & Near Luxury Vehicles
Many luxury brands saw their inventories rebound first. It makes sense when you consider platform vehicles that can be sold at $50,000 in non-luxury format can also be sold at $60,000 (or much more) if released to the OEM’s luxury segment. This increased supply has put price pressure on several popular brands and models.
- Acura, Audi, BMW, Cadillac, Jaguar–Land Rover, Lexus, Lincoln & Mercedes-Benz: Many popular (think “volume”) models are in-stock. Price pressures are different across brands. Savings can be found. Low supply models are still rare and commanding full, or near full prices.
Plug-In Hybrid and Electric Vehicles
Plug-in hybrid and electric vehicles (PHEVs and EVs) continue to face significant delays:
- Toyota RAV4 Prime, Kia Niro PHEV, Hyundai Santa Fe, and Tucson Plug-In Hybrid: These models have long wait times due to high demand and limited supply. However, dealers often have one in-stock or on order and available. By using the CarCostCanada Recommended Dealer Network, members leverage our dealer relationships to find select inventory.
Used Car Market
The shortage of new vehicles has driven up demand for used cars, leading to record-high prices. This trend will slow in 2025-26 as price pressures increase on the new vehicle category.
A Word About Documentation & Administration Fees
During the post-COVID years, dealers enjoyed record profits, but since spring 2024, profits have slowed. OEMs responded by narrowing dealer margins due to inflation and reduced profitability, leading to the rise of “documentation” or “administration” (admin) fees. Previously negotiable, these fees became exorbitant during supply shortages, sometimes reaching up to $10,000. Now, OEMs officially support these fees to balance margins.
Admin fees continue to cause friction between Canadians and car dealers, diminishing trust. OEMs that avoid random extra fees can build consumer loyalty. However, many OEMs now include admin fees (often from $300 to $1,000) in their price calculations online to support dealer profitability. Negotiability varies by brand and region. CarCostCanada provides the latest information about admin fees in our Market Value Reports.
iZEV Program Update
The Incentives for Zero-Emission Vehicles (iZEV) Program was originally scheduled to conclude on March 31, 2025, or when the allocated funds were fully exhausted. However, due to high demand, the funds have been fully committed ahead of schedule, and the program was officially paused on January 12, 2025. In response, most OEM’s have promised a new $5,000 price reduction on their iZEV’s to all Canadians. The temporary nature of these promises varies across brands and will need to be scrutinized in the weeks to come. Each brand is likely to watch the other to decide about their own continued support for this significant benefit.
Political uncertainty and lack of clear federal direction leave us in the dark. If the federal government doesn’t start another program, iZEV demand in some jurisdictions will wane. We expect price pressure on iZEV’s to increase as a result of this federal change, but the OEMs could respond with reduced Canadian supply. Much will hinge on the incoming U.S. President, who is not in favour of their large federal rebate program. If that program were to expire there might be a glut of iZEV’s available across North America, leading to a significant disruption of iZEV sales.
Conclusion
While the Canadian automotive market is still grappling with supply and demand challenges, there are signs of gradual improvement and corresponding price savings available for savvy consumers. Truck inventories are rebounding, and compact SUV supply is slowly increasing. However, PHEVs and EVs remain in high demand with extended wait times and the disruption of the federal iZEV program has caused much confusion about promoting the adoption of zero-emission vehicles.
For the latest information and to get a fair price in today’s market, use a CarCostCanada Report or contact us for specific advice tailored to your situation.