Canadian light vehicle sales are forecast to be slightly lower this year before improving in 2027, although the outlook remains highly uncertain with risks stemming from volatile oil prices and U.S. trade policy, according to Scotiabank Economics.
Canadian light vehicle sales are expected to reach 1.86 million units in 2026, or 1.6% less than the previous year, with demand remaining broadly stable through mid-year before recovering to 1.9 million units in 2027, wrote the bank in a note published late Wednesday.
In line with this forecast, Canadian light vehicle sales increased 1.6% on the month in June to a seasonally adjusted annualized rate (SAAR) of 1.9 million units, according to Omdia, marking the fourth rise in five months, said Scotiabank. Sales averaged 1.88 million units (SAAR) in Q2, up 3.8% from Q1.
"Broader economic factors that provide some support to vehicle demand have shown some recent improvement," wrote Scotiabank Economist John Fanjoy in the note, highlighting stronger economic growth, improving labor market conditions and the Bank of Canada keeping its policy rate on hold.
However, uncertainty over future trade relations with the U.S. is expected to continue weighing on business investment and the broader economic outlook, added the economist.