The Canadian automotive industry is undergoing rapid transformation, driven by electric vehicle (EV) adoption, evolving economic conditions, and shifting consumer buying behaviors. As dealerships navigate these changes, staying ahead of market trends is essential.
Our 2025 Canadian Automotive Dealer Outlook Report—featuring insights from 240 Canadian Automotive professionals—delivers expert analysis on key trends, dealership challenges, and strategies for success.
Stay competitive in 2025 – download the free report below for exclusive insights into the future of the Canadian auto industry and how Canadian automotive dealers are feeling about these unprecedented times.
1. Economic Trends Impacting Vehicle Sales
The Canadian automotive industry has faced inflation-driven price increases and supply chain disruptions, but new data suggests a potential rebound. Experts predict a return to pre-pandemic sales figures as consumer confidence strengthens. However, economic uncertainty remains a factor due to high interest rates, vehicle affordability concerns, and geopolitical risks such as U.S. tariffs and the upcoming Canadian federal election.
Key Statistics:
✅ 45% of respondents feel optimistic about the economic outlook.
✅ 74% believe affordability will continue to be a priority for buyers.
✅ 76% predict increased demand for extended financing.
Expert Insight:
A recent article in Canadian Auto Dealer collected insights from banking leaders for automotive from five banks who do regular business with dealers and their customers to get their perspectives. In that article TD Auto Finance’s Chris Morrison said the impact of the tariffs and economic uncertainty are difficult to predict. “As far as interest rates, we’re still calling it down to two-and-a quarter by the end of this year. So that will help consumers to some degree if the rate continues to drop down,” said Morrison. “I think the consensus is about a quarter point every quarter until they get down to that target of around 2.25.” Morrison said he doesn’t expect new vehicle sales to be quite back to 2019 levels, but “it will be close.” Like many of his banker colleagues, he said: “I’m cautiously optimistic.”
What This Means for Dealerships:
- Competitive Pricing: Dealers must balance affordability and profitability, considering the economic landscape and consumer purchasing power.
- Inventory Management: Adapting to supply chain fluctuations requires agile inventory strategies to meet consumer demand without overstocking or understocking.
- Financial Planning: With interest rate fluctuations on the horizon, dealerships should work closely with lenders to provide customers with flexible financing options.
2. EV Adoption is Accelerating, But Barriers Remain
Canada’s net-zero emissions goal by 2050 is fueling EV adoption, backed by government incentives, automaker investments, and charging infrastructure expansion. However, high costs and infrastructure gaps still pose challenges.
Key Statistics:
✅ 53% of respondents predict EVs will make up 10-25% of new car sales in 2025.
✅ 72% of consumers who do not consider EVs cite charging infrastructure as a major barrier to widespread adoption.
✅ 55% of Canadians underestimate the driving range of Electric Vehicles.
How Dealerships Can Adapt:
- Infrastructure Investments: Dealerships need to equip their facilities with charging stations and provide specialized training for staff to handle EV-specific inquiries and maintenance.
- Consumer Education: Educating customers about the benefits and functionalities of EVs can drive adoption and satisfaction.
3. Staffing Challenges: Retaining Skilled Talent is Key
The Canadian auto industry is facing a labor shortage, particularly in EV servicing and digital sales expertise. Retaining skilled employees will be critical for long-term dealership success.
Key Statistics:
✅ 31% turnover rate within dealerships vs 11.9% across other industries.
✅ 32.6% of dealerships plan to increase hiring to meet demand.
✅ 28% say EV training is a top priority for workforce development and retention.
Actionable Solutions for Dealerships:
- Retention Strategies: Implementing competitive compensation packages, career development programs and upskilling initiatives can enhance employee retention.
- Skill Development: Focusing on training programs that address new automotive technologies ensures that staff can meet evolving consumer needs.
4. AI & Automation: Reshaping Dealership Operations
Artificial intelligence (AI) is transforming dealership operations, from automated lead responses to predictive inventory management. These advancements allow dealerships to optimize operations, reduce costs, and deliver personalized experiences, ultimately leading to increased customer loyalty and profitability. However, a human touch along the process remains required.
Key Statistics:
✅ 39% of dealerships expect AI to significantly impact operations.
✅ 68% of dealerships believe automation has improved dealership efficiency.
✅ 25% of comments indicate that AI will not replace human sales reps.
Best Practices for AI Integration:
- Training and integration: Training staff on AI tools and seamlessly integrating automation into sales, customer service, and inventory management can lead to maximized efficiency.
- AI and human interaction balance: While leveraging AI for automation is a must, maintaining a human touch remains essential to build trust.
📥 Get the Full 2025 Canadian Auto Industry Report
These highlights provide a glimpse into the transformative trends shaping the Canadian automotive industry. For an in-depth analysis and actionable strategies to navigate these changes, download the full 2025 Canadian Automotive Dealer Outlook Report.
