New vehicle sales up 5%, but analysts warn of market slowdown

New vehicle sales in Canada continued to show spring gains, despite trade headwinds. Robert Lothian reports.

New vehicle sales in Canada continued to show spring gains, despite trade headwinds.

According to Statistics Canada, 194,524 new motor vehicles were sold in May, signifying a five per cent increase compared to the same month in 2024.

At Reaume Chevrolet in LaSalle, it’s been a “banner year” with cars flying off the lot.

“It’s been just the foot to the floor nonstop,” said Jesse Howell, the dealership’s general sales manager.

A nationwide increase does not come as a surprise for Howell, who said both new and pre-used vehicles have seen an increase in sales at his dealership.

Trade disruptions and increased cost pressures caused by U.S. tariffs have been widely expected to raise vehicle prices.

“If anything, it’s maybe put a little bit of pressure on customers to, if you were concerned about the market, get out early and get ahead of it,” Howell said.

A separate StatsCan report found the cost of passenger vehicles rose 4.1 per cent year over year in June.

Though the car market performed well in the first half of the year, analysts believe it will be short-lived.

Sam Fiorani, the vice-president of Global Vehicle Forecasting at AutoForecast Solutions, believes early sales success is due to buyers getting ahead of potential price increases.

“Just because the tariffs are on the U.S. side does not mean that Canada is going to get away without increased costs, and consumers see that,” Fiorani told CTV News.

Despite a projected “less robust” second half, Fiorani added Canadian sales are expected to be good compared to the last five years.

“This is a particularly good year relative to those. It’s not compared to historically historic highs of about ten years ago,” Fiorani noted.

A similar picture was painted in a July 9 auto sales outlook released by Scotiabank.

“The automotive sales rate is expected to remain soft through the second half of 2025 as softer labour markets and uncertainty weigh on consumer spending growth,” the report reads.

Economists for the bank believe Canadian light vehicle sales will total about 1.8 million in 2025 and fall slightly in 2026.