Quarterly report: a roller-coaster ride for the start of 2025
Rebate and tariff issues had considerable effects on the auto industry early in 2025 and there’s more to come. Read our Quarterly Report to see how it’s all playing out.
Quarterly report: a roller-coaster ride for the start of 2025
We’ve made it into the second quarter of 2025; and to say that the first three months of the year were a roller-coaster is definitely an understatement. Even now, we’re not confident enough expect that everything we’re writing now will still be the same by the time you read it. So, we’ll look back on what did happen in the first quarter of 2025, and offer some insight on what might happen in the second.
Vehicle sales in Canada
DesRosiers estimates that 185,000 new vehicles were sold in Canada in March 2025, an increase of 11.4% from March of 2024, and the highest March sales since 2018. That puts the SAAR (seasonally adjusted annualized rate) at a very healthy 2.02 million, “broadly in line with February and a number that the industry would love to see repeated over and over again,” DesRosiers said.
Over the entire first quarter, Canadian sales were almost 425,000 vehicles, marking a 2.8% increase compared to the first quarter of 2024. Light trucks accounted for 88.1% of that, with passenger cars well behind at 11.9%. General Motors had the highest sales volume for the quarter at 74,000 units, an increase of 17.3% year-over-year. Luxury brands also did well, with Lexus up 17.6%; BMW up 13.5%; and Mercedes-Benz up 12.8%, although these percentages are compared to relatively soft sales last year.
The ZEV market in Canada
Zero-emission vehicles – EVs and PHEVs – had a tumultuous ride in the first quarter. In January, the federal government paused its “green” rebate of up to $5,000, ahead of its planned end date on March 31, 2025. This prompted several automakers to offer equivalent discounts to customers on its EVs for the month.
Quebec was already winding down its rebate program, dropping the amount from $7,000 to $4,000 at the beginning of 2025, and then planning for $2,000 at the start of 2026 and to end it entirely by 2027. But it temporarily suspended its program on February 1, 2025 until the end of March, and the $4,000 payment isn’t retroactive for customers who registered new EVs during that time. The program returned on April 1, 2025.
British Columbia also paused its rebates in January, when funds ran out due to a large number of EVs being registered, but later reinstated it. Some provinces, including Quebec, Alberta, and Saskatchewan, placed extra annual registration fees on EVs, saying their owners don’t contribute to road maintenance because they don’t pay gasoline taxes.
Likely due to the lack of rebates, ZEV sales across Canada in January were one-third of what they’d been in December 2024, according to S&P Global Mobility. ZEV penetration rate – the percentage of EVs and PHEVs among total vehicle sales – was an average of 15.4% in 2024. It rose to 18.9% in the final quarter of 2024, mostly as Quebecers rushed to get the $7,000 rebate before it fell to $4,000. Throughout 2024, Quebecers bought 54% of all ZEVs sold across Canada; and in the last quarter of 2024, 42% of all vehicles sold in Quebec were ZEVs. Then, in January of 2025, Canada’s ZEV penetration rate fell to just 13.3%.
Tesla ended up mired in controversy in March, when the federal government froze $43.2 million in rebates to it, pending an investigation. That amount covered 8,669 EV rebate claims Tesla filed over just three days in January, right before the Canadian government paused its rebate program and closed the online dealer claims portal. That left about 200 dealers from other brands with more than $10 million in outstanding rebate payments. In March, several provinces and territories announced Tesla vehicles were no longer eligible for their rebates.
DesRosiers reports that while ZEV sales saw a modest uptick in March 2025 compared with February, “sales however remain well below their 2024 highs; it will be interesting to see how sales progress with the return of Quebec incentives in April.” Other issues that may potentially affect ZEV sales include the end of the carbon tax, lower gasoline prices, and tariffs. That last issue could even have long-term effects on the new battery plants and supply chains currently in the works by companies in Canada.
Vehicle production figures
For February, the last month for figures from DesRosiers, vehicle production in Canada, the U.S., and Mexico was 1,297,903 vehicles; and that was down 5.7% from the same period in 2024. Passenger car production took the largest hit, falling 13.7%; while light trucks, which includes SUVs, fell by only 3.8%. Light trucks now account for 82.5% of all vehicles built in the three countries, up from 82.0% during the same period in 2024.
In February, the U.S. built 871,886 vehicles, accounting for 67.2% of all light-vehicle production in North America. Mexico was next with 317,171; while Canada trailed at 108,846, accounting for 8.4% of all production.
Measuring sales per dealer in 2024
DesRosiers also charts dealer sales in Canada, with last year’s figures being the latest available. In 2024, there were 3,734 dealer franchises in Canada, up from 3,714 the year before. Sales per dealer also increased, finishing 2024 with an average of 483 vehicles per dealer, up from 448 in 2023, and from 401 in 2022. Toyota and Lexus had the highest number of sales per dealer, at 847 and 743 respectively. In order, Subaru, Audi, Ford, General Motors, Mercedes-Benz, BMW, Hyundai, and Volkswagen dealers rounded out the top ten.
Looking forward into 2025
As we mentioned earlier, our crystal ball is pretty much out of commission this time around. The White House has demonstrated it can change its trade policies almost overnight, creating massive uncertainty and insecurity in an auto industry that’s now global, regardless of a vehicle’s final assembly.
Beyond auto tariffs, any placed on other goods can further affect the Canadian economy and squeeze consumers. If new-vehicle prices rise, used-car prices will undoubtedly follow them, and we could potentially see similar used-vehicle situations as we did during the microchip shortages. Other uncertainties that may affect the industry and dealers include the federal election, gas prices, EV rebates, and even just the general mood of consumers as they react to everything. As the saying goes, fasten your seatbelts, because it’s going to be a bumpy ride.