08:57 AM EDT, 04/14/2025 (MT Newswires) -- Canadian auto sales in March increased by 7.3% month-over-month to 1.98 million units at a seasonally adjusted annualized rate (SAAR), according to Wards Automotive, noted Scotiabank.

The rebound in auto sales, combined with upward revisions of more than 9% to data for both January and February respectively, resulted in a 1.8% quarter-over-quarter gain for Q1. In non-seasonally adjusted terms, Q1 sales were up 4.3% year-over-year and up 3.6% above the same quarter in 2019, said the bank.

Auto sales' strong start to the year could be driven at least partially by sales pulled forward from consumers that may have been looking to front-run United States tariff disruptions, notably from the surge in March, stated Scotiabank. The U.S. had been threatening to impose tariffs on some imported Canadian goods since late January, with some tariffs coming into effect in early March, and it was announced on March 26 that additional tariffs would directly target the automotive sector.

The U.S. has imposed tariffs of 25% on automobile imports with plans, with preferential tariff treatment to CUSMA-compliant vehicles, and plans to expand these tariffs to automotive parts once there is a process in place to apply the tariff exclusively to their value of non-US content. Meanwhile, Canada has retaliated with 25% tariffs on non-CUSMA-compliant vehicles being imported to Canada from the U.S., and 25% tariffs on non-Canadian and non-Mexican content of CUSMA-compliant vehicles imported from the U.S.

While Canada's retaliation announced on April 3 doesn't include automotive parts and the U.S. has put a 90-day pause on retaliatory tariffs for most countries, the overall costs from measures to date and uncertainty around the (de-)escalating trade conflict are likely to having lasting effects with some businesses having announced changes to hiring and production plans while waiting further clarity.

The bank's outlook for Canadian light vehicle sales of 1.84 million in 2025 and 1.83 in 2026 likely faces downside risk, notably in the outer years to reflect developments and pressures that the escalating tariffs will have on the automotive sector and overall economic activity.

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