Canadian car sales defy the trend and grow by 6.9% year-on-year in July

Despite the uncertainties surrounding the trade war and electric vehicle policies, Canada's automotive market continued to show strong signs of recovery in July. According to the latest data from DesRosiers Automotive Consultants (DAC), a Canadian automotive consulting firm, new vehicle sales in Canada reached approximately 172,000 units in July, marking a year-over-year increase of 6.9% and setting a new record since July 2019 (prior to the outbreak of the COVID-19 pandemic), when sales reached 174,000 units.

DAC noted that this growth reflects the “resilience” of Canada's automotive retail sector, despite the imposition of 25% tariffs on imported vehicles by both the United States and Canada, as well as the Bank of Canada's similar assessment of the overall economic situation in Canada at the end of July. However, DAC specifically pointed out that the July data contains several special factors that require careful consideration: July 2024 sales data was relatively weak, and July 2025 had one additional sales day compared to the same period last year. Additionally, the impact of Canada's retaliatory tariffs has not yet fully materialized, as OEMs are still selling inventory from before the tariffs were implemented to some extent.

In July this year, Canada's seasonally adjusted annualized sales rate (SAAR) for automobiles was 1.89 million units, which was below the peak of 2 million units reached in both February and March this year; however, Andrew King, Managing Partner of DAC, stated in a statement that the July SAAR did not decline compared to the level in the second quarter of this year, and given the multiple challenges facing the Canadian economy, this performance was already commendable.

Currently, the automotive industry still faces multiple uncertainties. On the one hand, while the US has granted tariff exemptions for goods compliant with the US-Mexico-Canada Agreement (USMCA), automakers are still awaiting President Trump's specific adjustment plan for tariffs on “non-US-made” components in completed vehicles.

On the other hand, the Canadian federal government has not yet clarified how and when it will restart its iZEV program, which previously provided eligible electric vehicle purchasers with a subsidy of up to $5,000. Additionally, despite growing calls to terminate the zero-emission vehicle (ZEV) sales mandate, the Canadian federal government remains committed to enforcing this mandate, which reportedly requires that 100% of light-duty vehicles sold by 2035 be zero-emission vehicles.

Andrew King stated that this uncertainty has led to a decline in electric vehicle sales in Canada in July, though DAC has not disclosed specific figures. Andrew King said, “The industry and Canadian consumers urgently need the Canadian federal and provincial governments to provide clear information and practical solutions regarding future ZEV mandates and incentive policies.”

July sales performance of automakers in Canada

In July this year, among the 10 brands that still publicly report monthly sales data in the Canadian market, none saw a decline in sales; in fact, four brands achieved year-over-year growth of 20% or more. Specifically, Genesis, the lower-volume luxury brand under Hyundai Motor Company, saw the largest increase, rising 50.9% year-over-year to 803 units; Toyota followed closely behind, with sales up 29.5% year-over-year to 20,286 units.

Despite the absence of a federal government-level electric vehicle incentive program in Canada, Toyota's sales of electrified models (including hybrids) in Canada reached a record high in July, with 9,600 units sold, accounting for 47.3% of Toyota's total sales in Canada for the month.

Toyota stated in a press release: "For the Toyota brand, strong demand in the sedan segment has driven sales of electrified vehicles in the Canadian market. The Toyota Prius plug-in hybrid set a new sales record in Canada in July, with 1,108 units sold, representing a year-over-year increase of 337.9%. The Toyota Corolla Hybrid also achieved a new sales record in Canada in July, with 1,940 units sold, representing a year-over-year increase of 179.9%; closely following was the Toyota Camry Hybrid, which saw its sales in Canada surge by 89.9% year-over-year to 1,037 units in July, also setting a new record."

Another brand under Toyota Motor Corporation, Lexus, also saw record-breaking sales of its Canadian-made NX hybrid vehicle in July, with a year-over-year increase of 77.8%.