Scotiabank Sees Canada's New Vehicle Sales Rising Gradually This Year, in 2027 After Q1 2026 Holds Steady
Canadian auto sales marginally declined 0.1% month over month to 1.81 million units at a seasonally adjusted annualized rate (SAAR) in March, based on data from Omdia, said Scotiabank.Upward revisions to data for January and February resulted in Q1 sales averaging 1.79 million SAAR units, stronger than previously expected but still down 0.2% relative to Q4 2025.Non-seasonally adjusted (NSA) sales reported by the same source for March were 170,600, down 7.8% year over year, although compared with a relatively strong start last year before newly imposed tariffs began to upend global trade.When comparing Q1 sales in NSA terms against the same period across recent years, sales were down 6.5% relative to 2025 and down 2.3% relative to 2024.The recent decline in seasonally adjusted new vehicle sales may have bottomed out, as the selling rate over the past two months has increased in line with historical trends, stated Scotiabank. However, only time will tell as there remains a host of competing factors that will impact demand.Canada's overall employment level contracted in January and February, while the unemployment rate trended sideways around 6.7% three-month moving average. Global oil prices remain elevated amid the conflict in the Middle East, which is widely expected to push up headline inflation, while the Bank of Canada will be looking for signs of risks that higher input costs are being passed through to core inflation.While the bank estimates that higher oil prices are likely a small net positive to Canadian gross domestic product growth, higher costs at the pump may weigh on vehicle demand in the near term. Meanwhile, the new federal Electric Vehicle Affordability Program may boost EV sales over the coming months.Scotiabank's outlook for Canadian light vehicle sales is 1.81 million this year. The bank expects demand to gradually improve throughout this year and next, rising to 1.87 million in 2027, although with larger uncertainty given elevated and volatile oil prices clouding the outlook.