In an aerial view, BMW vehicles are displayed for sale on a lot at the BMW of South Austin dealership on May 16, 2025 in Austin, Texas Photo by Brandon Bell /Getty

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Supply-chain disruptions beginning in earnest in 2021 delivered consumers a battering that only intensified when coupled with unexpected tariffs last year. The fallout in the new-car market has been nuanced; some prices have gone up with demand, some have fallen. Dealers created stockpiles in advance, and manufacturers searched for workarounds that often included eating the tariffs and counter-tariffs. Baris Akyurek, Vice President of Insights & Intelligence at AutoTrader, says used-car prices in the past year went up an average of $830. That former safer haven for buyers remains a challenge. 

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Much of the struggle in the used-car market began with the missing 1.5 million vehicles that weren’t sold during the pandemic, and people hanging onto their vehicles where they might once have traded in or returned after a lease. I asked Daniel Ross, Director, Strategic Market Insights at Canadian Black Book, when there might be some easing in the used market.

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“Used supply will pick up, but not yet this year. We forecast it will start rebuilding in 2027 as new-vehicle sales constraints become fully digested in the supply network,” says Ross. He notes some headwinds: high residual values brought about shorter lease terms in 2023 and 2024, but affordability problems stretched financing terms to 84 months in some cases. It really is a dog’s breakfast, but look for used supply to get healthier next year.

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What now for buyers? “We don’t think the CUSMA review will have a big impact on the car market in the short term,” say Akyurek. “It’s going to be more of a slow burn than the tariffs introduced last year.” He does acknowledge, however, what he calls the difference between ‘normal’ negotiations and those led by Trump. If there is an escalation in Trump’s tantrums during negotiations, and he decides to throw in more tariffs as a threat or punishment, Akyurek says “we might see a return to what happened last year as buyers raced to get ahead of the impact.” It is increasingly difficult to make predictions based on statistics, history, and accepted modelling when faced with an entire set of unknowns on the other side. 

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A couple walking through a car dealership, shopping for a new electric vehicle (EV) Photo by Getty

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In the new-car market, Akyurek says the safe landing spots for consumers are in domestic brands and the European luxury segment. AutoTrader looks at day supply — how long a vehicle is sitting on a dealer’s lot. When demand shrinks, that timeframe gets longer, creating a space for buyers to find some movement on price. Akyurek says demand in those two sectors has shrunk. He says to consider that the current average day supply, as of the end of May, is at 68 days, with 60 days being optimal.

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“The top five are Ram, Dodge, Mercedes-Benz, Jeep, and Chrysler, which have the highest day supply, with Jeep having the highest at a 131-day supply,” says Akyurek. Conversely, he says Cadillac is super-popular right now, with a 24-day supply. That’s followed by Toyota at 25, Subaru at 29, Lexus at 34 and Genesis at 48.

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Canada put a responding tariff on vehicles imported from the U.S. last year. Along with exemptions protected by CUSMA, we also have a remission program that permits makers who build here to import a corresponding number before those counter-tariffs bite. GM and Stellantis have seen their remission-protected numbers fall after both makers pulled various production lines from Canada in a rush to placate the Trump administration. 

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Subsequently, consumers in Canada need to pay close attention to not just the country of origin on the VIN of the car they’re considering, but also whether it still falls under the remissions umbrella. To make this more complicated, none of these numbers are publicly available, so there’s uncertainty surrounding when those limits might be hit. This adds to the hurry-up-or-miss-out tenor of the current car-buying landscape. 

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Consumers also need to keep in mind that the massaging of the messaging surrounding car loans over the past decade is doing them no favours. To combat rising prices, buyers have responded by accepting longer loan terms. It’s dangerous, and the habit is coming back to haunt more and more of you. With average car payments pushing beyond 800 bucks a month and stretching out for seven or eight years, the damage to household budgets is unsustainable. 

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Shari Prymak at Car Help Canada is seeing a shift in buyer priorities. “We are definitely noticing strong consumer interest in financially safe options. Small crossovers, compact cars, and hybrids from reputable brands like Toyota, Subaru, Mazda, Honda, as well as Kia and Hyundai,” he says. They’re seeing an uptick in the $30K to $50K range, with a focus on high-value base models.

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2026 Subaru Crosstrek Hybrid Limited vs 2026 Toyota Corolla Cross Hybrid SE Photo by Jil McIntosh

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“We are finding that consumers are prioritizing vehicles that offer strong value, have strong reputations for reliability, low operating costs, and are even mindful of long-term resale. Whatever saves them the most money. Hybrids remain one of the hottest segments because they deliver all of that. And the Japanese and Korean automakers are ones that consumers are really drawn to. Even base model cars, which really aren’t basic anymore. They offer all the essential features, including safety features, at the lowest possible price.”

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Everyone notes that the return of federal EV incentives coinciding with the U.S. war on Iran has changed the landscape in that segment. Used EVs, traditionally having lost value at a faster clip than their ICE counterparts, are now being snapped up by consumers smelling a deal. The incoming Chinese EVs have not only created a stir in the headlines, Daniel Ross points out the vehicles will be an optical intrusion as much as a metal one. As the used market grows, he points out that EVs are carving out their own ecosystem. 

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Electric vehicles waiting to be loaded on the BYD Explorer No. 1, a domestically manufactured vessel that exports Chinese automobiles Photo by Getty

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“As Chinese EVs enter the market, if they’re priced advantageously against the legacy brands and if you can adopt that vehicle to your lifestyle, that’s probably going to be where some of the best deals are going to be,” he says. On the used side, Ross predicts OEMs are going to face challenges from these imports almost immediately.

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“The optics of the market’s transition with these Chinese EVs is going to change the visibility that regular consumers have of EV development. The 49,000 isn’t a big share of our market, but if you see a brand-new EV from somewhere like Jaecoo at $32,000 with 550 km of range, all of a sudden, that Chevy Bolt that’s the same price isn’t looking too hot. This is what is going to lead the narrative. If these vehicles prove they can withstand Canadian weather and support the average household, they’re going to be more commonplace,” says Ross.

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The challenge extends to newer manufacturers, too, like Lucid and Rivian with their high-end vehicles. “Legacy or start-up: it’s going to increase pressure in the EV segment. Hybrids and plug-ins will continue to grow, and a company like Toyota is diligently watching price and demand and continues to be a powerhouse,” says Ross. 

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Keep an eye on supply; shift to more efficient segments; factor in the financing costs. We are at a crossroads.

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