Canada’s 2025 Auto Market: 7 Key Trends Driving SUV, Truck, and EV Surges—What Buyers Need to Know Now

The market is marked by rising SUV and truck demand, significant movement among manufacturers, a changing landscape for electric vehicles (EVs), and ongoing economic uncertainties impacting future trends. Here’s a comprehensive look at the Canadian annual car sales and automotive market trends for 2025.

2025 Auto Sales Forecast and Market Recovery

Industry analysts, including Scotiabank and MarkLines, project that Canada’s annual new vehicle sales in 2025 will reach around 1.84 million units. This estimate represents a 6.4% increase year-over-year for Q1 2025, based on sales of 430,845 new vehicles in the first quarter. January 2025 alone saw 118,000 units sold—a 3.1% increase from January 2024, matching the strongest January performance since 2018.

After a period with annual sales dipping by 24% from 2018 to 2022, the industry began its recovery in 2023 (+11%) and continued to grow in 2024 (+8.8%). However, the market has not yet returned to the record high of over 2 million annual sales seen in 2017.

Key Points:

• Economic support: Lower interest rates in Canada are encouraging consumer spending and auto investment.
• Market not fully stabilized: Continued market fluctuations and international trade uncertainties remain.

Popular Vehicle Types and Buyer Preferences

SUVs and crossovers now outpace passenger cars in new vehicle sales. In early 2025, only 13% of new vehicles sold were traditional passenger cars, with the remainder being light trucks, SUVs, or crossovers—a shift observed over the past decade.

Market Highlights:

• SUVs/Crossovers: The Toyota RAV4 leads this segment, while the Honda CR-V and Hyundai Tucson have shown notable growth.
• Pickup Trucks: The Ford F-Series remains among the top sellers, followed by the Chevrolet Silverado and GMC Sierra.
• Sedans and Cars: Market share for traditional passenger cars continues to decline, with models such as the Toyota Camry, Corolla, and Prius seeing reduced sales. The Honda Civic is noted as the top-selling car within the segment.

Brand Performance and Market Shifts

Manufacturer performance in 2025 Q1 shows a mix of established leaders and emerging competitors:

• Ford: Reports 23.8% higher sales compared to last year.
• Toyota: Maintains a significant presence, though with a 15% reduction in sales.
• Chevrolet: Increases sales by 14.8%, narrowing the gap with Toyota.
• Mazda: Rises 21%, influenced by CX-50 interest.
• Hyundai: Tucson (+32%), Santa Fe (+80%), and Ioniq 5 (+46%) contribute to an overall 11.4% gain.
• Honda: CR-V and Civic drive a 9.9% increase.
• Nissan: Rogue experiences an 11% decrease, while Kicks, Altima, and Ariya EV support overall brand performance.

Electric Vehicles (EVs) and Zero-Emission Developments

EV sales increased by 11.5% in Q1 2025, accounting for 5.12% of the Canadian new vehicle market. Recent or upcoming changes to the federal iZEV incentive and Quebec’s EV rebate may influence future market growth.

EV Market Observations:

• Tesla: Shows a year-over-year gain of 38.1%.
• Volkswagen & Kia: Stand out among leading EV brands, with Kia especially noting a 105.5% increase.
• EV Adoption: Growth remains positive, but changes in government incentives present potential challenges to reaching the federal ZEV goal of 20% by 2026.

Industry Structure and Production Dynamics

Canada’s automotive sector is a prominent part of North American vehicle production, assembling approximately 1.4 million vehicles annually and supported by about 700 parts suppliers. Influences affecting the sector include:

• Global supply chain disruptions (such as semiconductor shortages)
• Trade policy and tariff uncertainty, including possible 2025 U.S. tariff proposals with implications for assembly, exports, and pricing.
• Production decisions, with examples such as Nissan relocating Rogue production for Canada from Tennessee to Japan in anticipation of potential tariff changes.

Market Challenges and Factors Affecting 2025

While Q1 2025 sales numbers are strong, several factors could affect results through year-end:

• Policy and Incentive Changes: Adjustments to federal and provincial EV incentives may impact ZEV adoption.
• Trade and Tariffs: Proposed tariffs in U.S.–Canada automotive trade could influence pricing and supply.
• Economic Conditions: Macroeconomic and geopolitical trends may affect both consumer confidence and industry investment.

Overview of 2025 Market Developments

• Annual sales forecast: ~1.84 million units, reflecting continued recovery
• Q1 sales growth: 6.4% year-over-year, with notable January results
• SUVs/trucks: Continue to lead, with sedans representing a smaller portion of sales
• Leading brands: Ford, Toyota, Chevrolet, and Hyundai among the sales leaders
• EV market share: 5.1% of new sales and increasing, though future growth depends on policy decisions
• Market volatility: Influenced by trade, economic, and regulatory factors
• Production: Canada continues as a significant manufacturer in North America, facing challenges from external factors

Canada’s auto market in 2025 reflects significant transition and variability. The year began with momentum, but upcoming policy changes and industry trends—particularly within the electric vehicle segment—may affect results in the coming months. Manufacturers, retailers, and buyers can monitor developments related to trade policy and incentive programs to better understand future impacts.

Sources

• MarkLines: Automotive Sales in Canada by Month
• Focus2Move: Canada Auto Sales
• Driving.ca: Best-selling Cars, Trucks, SUVs, Auto Brands in Canada, Q1 2025

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