Greater turmoil was seen in the Canadian auto industry in May, according to DesRosiers Automotive Consultants, which said the most important issue — something that was supposed to happen last month — did not.
“Specifically, Trump’s proposed 25% tariffs on CUSMA auto parts that were meant to kick in on May 3rd — and would have had immediate and disastrous impacts for the markets and production systems in all three countries — were postponed,” said DAC in its update.
That breathing room allowed the market to continue with some resilience. For example, DAC estimated May sales came in at 187,000 units. That’s up 7.9 per cent from the 174,000 units a year earlier. However, May 2025 had one extra selling day, which makes the 2024 unit figure a weak comparable. Still DAC said, when considering the broader trade and economic environment, May’s performance was solid.
DAC also said the SAAR for the month came in at 1.81 million, less than in recent months and well off historic highs. “Indeed, it should be noted, that for the three years, 2017-2019, May sales were consistently above 200,000 units — with May being the largest sales month in each of those years.”
Looking forward, the concern now falls on the impact of Canadian counter tariffs on the market outlook. Counter tariffs kicked in on April 9th. Fast-forward and pre-tariff inventory is being rapidly depleted. Based on DAC’s analysis for the first quarter of the year, around 41% of the light vehicles sold in Canada were sourced from the U.S. However, they also noted that the Canadian government introduced a special Motor Vehicle Remission Order reducing/eliminating the impact of the tariffs on the five companies that assemble in Canada.
“If you exclude vehicles from these five companies then the share of vehicles sold in Canada that would face the full 25% tariff falls to less than 9% of the market,” said Andrew King, Managing Partner of DAC, in a statement. “To be sure there will be specific models sourced solely from the U.S. by companies other than the “5 Guys” that may be effectively priced out of the market by the Canadian tariffs. However, for the market as a whole the impact will be considerably less than first envisaged.”
