Why haven’t Canadian new car prices gone through the roof?

We asked each major automotive brand if and when automotive price increases are expected. A few of them replied.

(Brands: Chrysler, Dodge, Jeep, Ram, Fiat, Alfa Romeo and Maserati)

“We are not raising prices at this time on any of our Stellantis branded vehicles,” the company said.

(Brands: Nissan and Infiniti)

“We are assessing the situation and are not prepared to discuss our pricing strategy currently. However, we will continue to monitor the impact and assess market demands,” the company said.

“It is worth noting that many of Nissan’s top-selling vehicles in Canada — such as the Versa, Sentra, Kicks Play, all-new Kicks, Infiniti QX50, and QX55 — are sourced from Mexico, while the Rogue, Ariya, Armada, and Infiniti QX80 come from Japan. In 2024, production from Japan and Mexico accounted for 85 per cent of our total Canadian sales.”

Hyundai said it had no information to share on pricing at this time.

“Hyundai Auto Canada continues to monitor the current situation closely and will remain agile to meet the needs of its Canadian customers, Hyundai’s 226 dealers and 31 Genesis distributors nationwide,” the company said.

Kia, which is part of the Hyundai Motor Group, also couldn’t comment on pricing.

“While we can’t comment on our pricing strategy for U.S.-manufactured vehicles at this time, the vast majority of Kia models (70 per cent) is manufactured outside of the U.S. for the Canadian market and as a result is not subject to tariffs.”

“I can confirm that at this time, we have not made any adjustments to MSRPs,” Volvo Car Canada said. “We are continuing to assess how this evolving situation might impact our product offering and pricing.”

“The U.S. tariffs do not directly affect us in Canada since we import directly from Germany,” Porsche Cars Canada said. “Our decisions will be guided by what is best for our Canadian customers and our Canadian retail network.”

Autotrader, Canada’s largest automotive marketplace, has observed no material change in average new vehicle prices in recent months, other than slight month-to-month ups and downs.

In May, the average new vehicle price was $64,785 — up from the $64,600 seen in April and $64,500 in March. However, these averages are down compared to January, when new vehicle prices averaged $65,317, which was already down from a year earlier by 2.9 per cent.

“In April and May, there are very small month-over-month increases, but they are relatively small at this point,” said Baris Akyurek, vice-president of insights and intelligence at Autotrader.

While June is not yet over, at this time, no major change is expected either, he added.

Why new car prices aren’t rising yet?

A few months ago, Charles Bernard, lead economist with the Canadian Automobile Dealers Association, was predicting quickly rising vehicle prices, but that hasn’t happened yet for several reasons.

“The price effect on Canadian consumers wasn’t as bad as most anticipated,” he said.

Firstly, the tariff impact wasn’t as severe as originally anticipated.

Canada placed a 25 per cent tariff rate on U.S.-made vehicles, but not U.S.-made automotive parts as had been expected. Tariffs on parts would have had a compounding effect, Bernard said.

Prime Minister Mark Carney signalled on June 19, however, that if a trade deal is not struck with the U.S. soon, Canada will impose a new wave of counter-tariffs and measures by July 21.

Canada is also not placing tariffs on the entire U.S.-made car, only on the portion of it made in the United States. The portion of a vehicle containing Canada-United States-Mexico Agreement-compliant components that were manufactured in Canada and Mexico are exempt, so rather than a vehicle import being tariffed 25 per cent, the actual rate ends up lower, generally around half that rate.

“The tariffing environment wasn’t as bad as expected,” Bernard said, but added it hasn’t been good either.

He doesn’t have an exact figure, which varies from vehicle model to vehicle model, but shipping vehicles from the U.S. to Canada is adding about $1,000 to $5,000 per unit, which is less than the industry anticipated.

While Canada imports a lot of vehicles from the U.S., it imports more vehicles from Mexico, Europe and Asia, which are not affected by Canada’s counter-tariffs. Vehicle imports from the U.S. are also down slightly, as are exports to the U.S.

And automakers have found short-term solutions to isolate consumers from price increases. These include things like shipping more vehicles here from other parts of the world, instead of from the U.S., or by eating the added cost, but neither of these measures are viable long-term solutions, Bernard said.

Automakers are hesitant to raise prices, he said, especially as they’re hoping a trade deal is struck soon, but there’s no guarantee there will be a new agreement by mid-July.

“The longer this lasts, the longer these companies are exposed, which will lead to decisions that they have to make,” he said.

“If you’re a brand that exclusively builds in North America, you’ll be more exposed to these tariffs.”

Price increases likely to be spread out

Bernard said some brands have already raised prices, but those increases haven’t been noticeable yet.

He does expect car prices will go up, but he can’t guess by how much.

A likely scenario will likely see the tariff impact spread out over several vehicle models, rather than just the impacted ones. As an example, if an automaker builds car A in the U.S., but cars B and C are made in Europe or Asia, rather than increasing the price of car A by 12 per cent or whatever the actual tariff impact is, the brand would raise the price of car A by four per cent, and cars B and C, which are not hit with tariffs, also by four per cent.

He said this scenario may be more digestible to consumers, and is less likely to kill off particular segments.

He does think some brands may pull out of certain vehicle segments, if a particular model is significantly hit by tariffs and there are no workable solutions to mitigate the costs.

While Autotrader hasn’t seen significant new vehicle price increases yet, it has noticed a steady drop in new vehicle inventory this year.

Akyurek said 60 days of vehicle inventory is considered healthy, and Canada is currently sitting at a 51-day supply.

At the start of 2025, the day supply rate was at 73 and growing, peaking at 85 at the end of January, and it has been falling ever since.

Much of this drop in inventory has largely been driven by strong vehicle sales in the past few months as consumers made purchases ahead of anticipated tariff-related price increases and disruptions.

These inventory levels are also not consistent between brands, as some brands are running day supplies as low as 25 to 30, while others may be running as high as 90.

Because of the varying levels of consumer demand for certain brands and segments and because of the varying levels of tariff impact on certain brands, Akyurek expects, when prices start rising, they won’t be consistent from brand to brand.

While new vehicle prices are remaining steady for now, used vehicle prices are rising, Autotrader data shows.

In a typical year, used vehicle prices start the year higher and then come down through the year, but this year, it’s the reverse, Akyurek said.

Average used vehicle prices in May were $37,440, which is 1.2 per cent higher than April, which was 0.5 per cent higher than March, which was 0.3 per cent higher than February. May 2025 is also 1.8 per cent higher than the same time last year.

As of right now, June appears to be trending upwards as well, he said. Part of the reason for these price increases is related to long-term COVID-19 effects and the recent rise in demand.

During the COVID years of 2020 through 2023, there were 1.5 million fewer new vehicles sold in Canada than would have been in typical years, resulting in fewer vehicles available on the used car market today.

He said the used car market was already constrained, even before the tariff situation.

“And now, with these tariffs, the demand has increased and the supply is getting squeezed even more. Low supply, higher demand and therefore prices have been going up,” Akyurek said.