The Canadian automotive market is navigating several significant challenges in 2025. Ongoing inflation and price hikes have particularly affected high-end vehicle brands. Supply chain disruptions and robust demand have also led to tight inventories and increased vehicle prices. However, there are signs of improvement, with some brands and dealerships beginning to offer discounts. Below is an informative overview of the current market landscape, emphasizing key factors and vehicle models.
Supply and Demand Challenges
Several critical factors continue to influence the availability of new vehicles in Canada:
- Parts Shipment Disruptions: Ongoing issues with parts shipments have hindered production rates.
- Global Market Focus: Many manufacturers prioritize inventory for larger markets such as the U.S., Europe, and China.
- High Immigration Rates: Increased immigration has increased passenger vehicle demand.
Truck Inventory Insights
The inventory levels for trucks have shown notable recovery:
- Chevrolet Silverado and GMC Sierra: These models have become more readily available at dealerships.
- RAM 1500 and Ford F-150: While availability has improved, certain trims and configurations may still be challenging.
Overall, domestic truck inventory has reached a more “normalized” state. Many dealers now have vehicles in stock, and some dealerships offer significant discounts for consumers buying or leasing models that are in inventory or marked as “available” (excluding those on factory order).
Compact SUVs
The compact SUV market is currently competitive, with several models experiencing varying levels of backorders:
- Toyota RAV4 and Honda CR-V: Both vehicles are in high demand, but the backorder delays have improved compared to six months ago.
- Subaru Forester: While supply gradually increases, certain trims may still have longer wait times.
- Nissan Rogue: This model has a relatively decent supply, with dealers often open to negotiation on pricing.
Luxury Brand Vehicles
Many luxury brands have seen an earlier recovery in their inventories. The recovery is partly due to the strategy of selling platform vehicles that may cost around $50,000 in the non-luxury segment but can fetch $60,000 or more within the luxury realm. This increase in supply is exerting price pressures on various popular models across the luxury segment:
Acura, Audi, BMW, Cadillac, Jaguar–Land Rover, Lexus, Lincoln, and Mercedes-Benz: Several popular models are available in stock. Price pressures differ by brand, and consumers can find savings, though some low-supply models remain scarce and retain high prices.
Plug-In Hybrid and Electric Vehicles
Plug-in hybrid and electric vehicles (PHEVs and EVs) continue to face significant inventory delays:
Toyota RAV4 PHEV, Kia Niro PHEV, Hyundai Santa Fe, and Tucson Plug-In Hybrid: These models have experienced long wait times due to robust demand and constrained supply. However, dealers might have units in stock or on order, and utilizing the CarCostCanada Recommended Dealer Network can assist members in locating specific inventory.
Used Car Market
The shortage of new vehicles has driven an increased demand for used cars, resulting in record-high prices. This trend will abate during 2025 and 2026 as price pressures on new vehicles intensify.
What about Documentation and Administration Fees
In the years following COVID-19, dealerships experienced record profits, but by spring 2024, these profits began to decline. To address this, Original Equipment Manufacturers (OEMs) have reduced dealer margins, prompting the rise of “documentation” or “administration” fees. These fees, which were previously negotiable, became significantly inflated during supply shortages, at times reaching up to $10,000. Now, OEMs officially endorse these fees to help balance profitability.
Admin fees continue to create tension between Canadians and car dealers, impacting consumer trust. Brands that can eliminate arbitrary fees may foster stronger consumer loyalty. However, many OEMs now integrate admin fees—typically $300 to $1,000—into their online price calculations to support dealer margins. The negotiability of these fees varies by brand and region. CarCostCanada offers the most current information on admin fees through its Market Value Reports.
iZEV Program Update
The Government of Canada’s iZEV Program was paused on January 12, 2025. In light of this pause, many original equipment manufacturers (OEMs) have committed to a temporary price reduction of $5,000 for Canadian consumers of their zero-emission vehicles (ZEVs). The duration of these reductions may vary by brand. Close monitoring will be required in the coming weeks, as manufacturers may adjust their strategies based on competitors’ actions.
The current political climate and lack of decisive federal direction create uncertainty regarding future programs. If the federal government does not establish another incentive program, demand for ZEVs in certain regions may decline. This situation could increase price pressure on ZEVs, and manufacturers may respond by lowering their supply to Canada.
Conclusion
While the Canadian automotive market faces ongoing challenges related to supply and demand, there are signs of gradual recovery, with potential price reductions available for informed consumers. Truck inventories are on the rise, and the supply of compact SUVs is beginning to improve. However, the demand for plug-in hybrid electric vehicles (PHEVs) and electric vehicles (EVs) remains high, leading to extended wait times. The recent disruption of the federal ZEV program has contributed to confusion regarding promoting zero-emission vehicle adoption.
For the latest updates and to ensure you receive a competitive price in the current market, consider utilizing a CarCostCanada® Market Value Report.
Joe Glube is a Vice President at Armada Data Corp, and General Manager overseeing the CarCostCanada division. With a career spanning over three decades in automotive sales and dealership management, Joe brings a wealth of experience and industry knowledge to his role. Since joining Armada Data Corp, he has been instrumental in driving the company’s growth and strengthening its partnerships within the automotive sector.
Joe’s extensive background includes consulting for prominent organizations such as Honda Canada Finance, DealerSocket, and Ontario’s Motor Vehicle Industry Council. His expertise in new car dealership management and his strategic vision have been pivotal in enhancing CarCostCanada’s dealer network and customer service offerings.
