Canada's New Car Sales Rise 4.3% in First Half of 2025 Amid Tariff Concerns

According to foreign media reports, the latest industry data shows that driven by a surge in car purchases before the implementation of tariffs and cash incentives from automakers, new car sales in Canada rose slightly by 4.3% in the first half of this year, reaching 958,214 units. Sales in the second quarter increased by 6.4% year-on-year. However, analysts warn that the Canadian automotive market will face resistance in the second half of 2025. U.S. President Trump has continued to intensify tariff policies on the automotive industry, implementing multi-tiered tariffs on raw materials such as steel and aluminum, as well as specific automotive parts and complete vehicles, and has recently expanded the scope of tariffs to include copper imports. In retaliation, Canadian Prime Minister Mark Carney introduced counter-tariffs. These measures have not suppressed Canadian auto sales in the first half of this year. J.D. Power Canada reported that while car sales increased in the first half of the year, the average transaction price also rose. Robert Karwel from J.D. Power Canada stated, 'This is a win-win for the industry.' He analyzed that the average transaction price for new cars in Canada in the first half of 2025 was CAD 48,900, compared to CAD 48,300 in the same period of 2024, marking a 25% increase since 2022. To ensure vehicles are sold smoothly, automakers are spending significantly on incentives, with the average incentive amount stabilizing at CAD 5,500. This is due to the Bank of Canada continuously lowering interest rates, allowing manufacturers to invest more in incentives. The reintroduction of zero-interest installment plans has also directly lowered the barrier to purchase. Karwel pointed out that 'consumer concerns about tariffs have indeed triggered a certain degree of early purchases. As the effects of the current tariff policies gradually emerge, challenges for the Canadian automotive industry will become evident in the second half of the year.' He stated that manufacturers will spread the tariff costs across all brands and models, although companies are still willing to absorb some of the costs. Scotiabank's economic research department also indicated that the Canadian automotive market will be challenging starting in the second half of 2025. They predict that total car sales in Canada for 2025 may reach 1.88 million units, potentially shrinking further to 1.81 million units in 2026. Their Global Automotive Report states, 'Due to a weak labor market and uncertainty hampering consumer spending growth, Canadian auto sales are expected to remain sluggish in the second half of 2025.' The report specifically notes, 'Tariffs and uncertainty will continue to exert pressure on the outlook for the Canadian economy; however, this outlook carries significant uncertainty, particularly regarding the impacts of tariffs and potential price pressures on the automotive industry.'