There’s some disagreement about the forecast for Canada’s retail used market in 2025. But analysts agree on one thing: it’s hard to know exactly what retail used-car demand and pricing is going to look like this year.

“Assuming there are no changes in the market we expect to see a growth in the used-car market in 2025,” Baris Akyurek, vice president, insights & intelligence at AutoTrader.ca, told Auto Remarketing Canada.

However, changes are very likely. “Uncertainty is the high-level theme” of Canada’s used-car industry this year, Akyurek said.

In 2024, a return of new-car supply had a deflationary impact on used-car prices, with prices declining by 12.1% compared to the previous year, according to AutoTrader.ca.

That price correction was a delayed impact to “a lot” of price correction on the wholesale side, Daniel Ross, senior manager industry insights & residual value strategy at Canadian Black Book, told Auto Remarketing Canada.

CBB saw a 12 to 14% retail used price correction in the second half of 2024.

“With new-car volume returning, that helped the used market value price correction,” he said.

CBB sees used-car demand falling in 2025 but doesn’t expect much market turbulence. There is “probably a little more stability as a whole” in the used market this year, Ross said.

The increase in new-car supply in 2024 pulled some consumers from the used to the new market, Robert Karwel, director, customer success at J.D. Power PIN Canada told Auto Remarketing Canada.

Canada saw the highest volume of new car sales in 2024 since 2019, he said. New-car supply will remain abundant in 2025, he said.

“With more supply of new and stubbornly high (Average Percentage Rate) for used, I think the used-car market is going to be challenging,” Karwel said.

Leasing trough hits to hit used supply

Leasing is a primary source of used inventory for dealers. In Canada, 48 months is the most prevalent lease term. Leasing hit a low of 18% between 2021 and 2022, according to CBB.

That will drag down used supply in 2025. CBB forecasts used-car supply in 2025 to decline 3% annually to 1.57 million units and continue to fall in 2026 and 2027, bottoming out at 1.54 million units before rebounding to 1.65 million in 2028.

The lack of off-lease vehicles will hit the certified pre-owned market especially hard, J.D Power’s Karwel said. That may boost CPO prices but “the expected supply of new cars is still forecast to increase in 2025, which means we expect new-car pricing to be slightly deflationary” to the used market,” he said.

“2025 is going to be a real crossroad for used cars in Canada,” Karwel said.

Interest rate cuts not much help to used

Interest rates are another wild card impacting Canada’s 2025 retail used market.

The Bank of Canada began cutting interest rates in 2024 and rate cuts are expected to continue, which in general is good news for both new and used customers, Akyurek said.

But that hasn’t had a large impact on used-car loans, Karwel said. “We have barely seen any APR reduction (in the used market,” he said. “There is deal making on the new side but not on the used-car side.”

Then there’s the politics factor

Another huge wild card in forecasting Canada’s 2025 retail used market is the situation around U.S. President Trump’s tariffs on imports from Canada — which remains fluid

Prior to the tariffs being officially announced and subsequentially delayed, CBB’s Ross had predicted a “healthier used-car market from the retail side” in 2025 with a caveat: “15 to 20% of the market is shipped to the U.S.,” he said. “That may change if tariffs are imposed. That could curtail a lot of demand (and) it could bring down prices.”

Tariffs would also hit Canada’s overall economic growth, Akyurek said before they were announced. Some 76% of Canada’s manufacturing — including autos — goes to the U.S., he said.

Tariffs would reduce demand in the U.S. for Canadian goods and “if demand declines to the U.S., our economy will suffer, including automotive,” he said.
But “in terms of quantifying what the impact would be, I don’t think anyone knows,” Akyurek said.