Tariffs have once again found their way to the centre of the political conversation in Canada. How surprising!
This latest resurgence of interest in the trade situation began when President Donald Trump invoked Section 338 of the Tariff Act of 1930 to impose additional tariffs on a wide range of Canadian products, in response to what his administration described as discriminatory Canadian trade measures. It marked the first time a U.S. president had used Section 338 to impose tariffs, while remaining consistent with Trump’s broad interpretation of executive authority.
This whole saga — including the role it played in advancing discussions between the two countries and the politics behind it — will warrant its own column in the future.
What is immediately fascinating is that, through all the highs and lows of these high-level discussions, this volatile environment has effectively become the norm for Canadian auto dealers.
For the automotive sector, unfortunately, there is nothing particularly new about discussing tariffs. Whatever is being said or promised in Ottawa or Washington, the effects of the past 18 months of tariffs have been tangible for manufacturers, dealers and consumers.
Trade uncertainty has been one of the defining themes of this period. It has featured prominently in this column, in CADA’s advocacy work and, understandably, in conversations taking place at dealerships across the country.
But as we approach the end of summer and the return of Parliament — which will surely bring another busy fall — it is worth taking a broader look at what has been happening in our market.
As all of you are aware, the Canadian automotive retail market in 2026 has not demonstrated the consistency we might have hoped for. It has not been the nightmarish scenario some predicted when the current trade crisis began, but the past several months have been characterized by a lack of stability, dynamism and uniformity across the market.
What is immediately fascinating is that, through all the highs and lows of these high-level discussions, this volatile environment has effectively become the norm for Canadian auto dealers.
Tariffs and uncertainty surrounding the Canada-U.S. trading relationship certainly have something to do with that. But attributing every market fluctuation to trade policy would overlook a much larger transformation taking place beneath the headlines.
Affordability, household finances, changing consumer preferences, the evolution of ZEV adoption and even demographic changes within dealership workforces are increasingly shaping how Canadians purchase vehicles and how dealerships operate.
The recently released 2025 CADA Data Report provides an interesting window into many of these changes. Although 2025 can already feel somewhat distant given the pace of events, it is in many ways an ideal year to examine. It was the year trade tensions returned dramatically to the automotive world, but it was also a year when many of the affordability challenges dominating the political debate became clearly visible in the more granular aspects of the dealership business.
Financing provides a particularly good example.
The average amount financed on a new vehicle reached $57,981 in 2025, compared with $46,965 in 2020 — an increase of more than $11,000 in just five years. And while the average interest rate declined from its 2023 peak of 5.81 per cent to 4.67 per cent in 2025, borrowing remained considerably more expensive than it was at the beginning of the decade.
Consumers are adapting accordingly.
Leasing accounted for 28.81 per cent of new vehicles in 2025, continuing its recovery from just 22.9 per cent in 2022. Those numbers do not tell the entire story, and dealer experiences can help us better understand what is driving that shift, but the data confirms that something notable is happening.
As industry experts have been saying for months, affordability is playing a major role in defining the automotive retail market. Canadians still need and want vehicles. For many, having one is not really a choice.
Canada is one of the largest countries in the world, and the ability to get to work, school and other essential destinations is fundamental to our economy and way of life. Canadians are therefore increasingly looking for ways to manage the monthly financial commitment associated with vehicle ownership, and that inevitably affects the dealer-customer dynamic.
The same pragmatism can be seen in the automotive sector’s transition toward electrification.
Zero-emission vehicles represented 9.32 per cent of new registrations nationally in 2025, down substantially from 14.6 per cent in 2024. Battery-electric registrations fell from 202,103 to 115,049. At the same time, hybrid registrations increased from 169,090 to 230,081.
That rapid change is worth noting, not as an end-all, be-all indicator of where the market is headed, but as evidence of how quickly consumer behaviour can change.
It does not suggest Canadians have suddenly lost interest in more fuel-efficient or electrified vehicles. Rather, it reinforces something dealers have observed quite vividly over the past several months: Consumers will ultimately choose the technology that makes sense for their driving habits and individual circumstances — and, perhaps most importantly, their budgets.
When purchase incentives were abruptly removed, ZEV adoption declined sharply. When federal incentives returned, adoption began climbing again. Incentives help clarify the financial decision around purchasing a vehicle, particularly an EV.
Policymakers may frame these incentives in broader terms, but the data makes one effect difficult to ignore: They increase consumer purchasing power at a time when affordability has been steadily eroding.
Perhaps the most overlooked transformation, however, is taking place within the dealership workforce.
CADA’s latest workforce data shows significant differences in turnover between generations, while younger Canadians are increasingly moving into key dealership positions. This transition is happening while the industry continues to face substantial challenges recruiting and retaining skilled automotive technicians and other professionals.
In other words, dealerships are simultaneously adapting to a different consumer, a different vehicle market and a different workforce.
That is why the tariff conversation, as important as it is, cannot be viewed in isolation.
CADA’s latest workforce data shows significant differences in turnover between generations, while younger Canadians are increasingly moving into key dealership positions.
The most interesting lesson from the past 18 months may ultimately be that Canada’s automotive retail sector is being reshaped by several forces at once. Trade uncertainty has undoubtedly added another layer of complexity, but it has arrived alongside affordability pressures, changing financing behaviour, a more consumer-driven transition to electrification and important demographic changes within the industry itself.
Before Parliament returns and Ottawa inevitably dives into another extraordinarily busy fall of trade negotiations, complicated budgets, convoluted legislation and partisan political announcements, this is a useful moment to remember that the automotive market does not move according to one policy or one headline.
For Canada’s 3,778 franchised new-vehicle dealerships, adapting to change has always been part of the business.
What makes this period different is simply how many changes are happening at the same time.
And if the data from 2025 tells us anything, it is that understanding those changes will be just as important as reacting to the next tariff announcement.
