CADA Warns Auto Sales Could Plunge 25% Amid Escalating U.S. Trade War
The Canadian Automobile Dealers Association (CADA) warns that the ongoing U.S. trade war could reduce new-vehicle sales in Canada by up to 25% this year, potentially dropping from a projected 1.95 million units to as low as 1.5 million. CADA President Tim Reuss cited growing uncertainty from tariffs imposed by the U.S. on non-USMCA-compliant vehicles and Canada’s retaliatory duties on U.S.-made vehicles, which are expected to raise prices, disrupt the supply chain, and possibly push the industry toward recession. The fallout has already led to Stellantis pausing production at multiple plants, affecting thousands of workers. Reuss emphasized the destabilizing impact of market uncertainty on both consumers and the industry, warning that hesitation in purchasing decisions could further weaken the automotive market.
Tariffs Shake Up Used-Vehicle Market: Rising Prices, Shrinking Inventory, and Shifting Demand
The recent wave of automotive-specific tariffs is significantly impacting the used-vehicle market, affecting inventory, pricing, and sales, according to Cox Automotive. A new 25% tariff on imported vehicles has triggered a spike in new-vehicle demand, spilling over into the used market and prompting expectations of higher wholesale values in April. Used inventory declined to 2.15 million units in March, while retail used-vehicle sales rose 19.4% from February and 8% year over year. Tariffs on auto parts may also raise service and reconditioning costs. March's Manheim Used Vehicle Value Index (MUVVI) fell slightly due to weaker-than-expected seasonal gains, though wholesale activity picked up at month-end. EVs saw steeper depreciation than non-EVs, even as their auction share hit record highs. Major vehicle segments posted mixed results, with luxury cars and SUVs outperforming while compact cars and sedans lagged. Despite short-term volatility, Cox revised its 2025 forecast upward, projecting used-vehicle sales to hit 20.1 million and the MUVVI to increase by at least 2.1% due to demand shifts from new to used cars. Meanwhile, consumer confidence declined in March across multiple indicators, reflecting rising inflation expectations and diminished outlooks on vehicle-buying conditions.
Tariffs Trigger Surge in Vehicle Prices and Industry Uncertainty
Steep U.S. tariffs on imported vehicles are already driving up new and used car prices, with industry experts warning of further increases as supply chain impacts ripple through. Used car demand is rising as consumers seek alternatives to higher new car prices, pushing used prices higher as well. The 25% tariffs, along with additional steel and aluminum duties, could raise vehicle costs by $5,000 to $10,000. Retaliatory measures from Canada and supply shortages could worsen the situation, leading to plant shutdowns like the one already seen at Stellantis’ Windsor plant. Experts say the disruption mirrors the COVID-19 supply crunch, with pressure likely concentrated on specific makes and models, potentially affecting insurance premiums as well. Calls to shift production back to the U.S. face logistical and time constraints, adding to industry uncertainty.