Canada may new car sales decline, spring auto market starts weak

Gasgoo reported, citing foreign media, that Canada’s spring new-vehicle sales got off to a sluggish start, dragged down by a roughly 1.7% year-on-year decline in May sales. Some analysts had previously forecast that Canada’s full-year new-vehicle sales in 2026 could reach 1.9 million units, but automakers and dealers will face considerable challenges in achieving that target.

According to estimates by DesRosiers Automotive Consultants (DAC), new vehicle retail sales in Canada were approximately 184,000 units in May, marking the eighth consecutive month of decline.

Currently, in the Canadian market, only 10 automotive brands disclose sales data on a monthly basis, while most other brands report quarterly, and Ford releases data annually. Therefore, the industry sales figures are estimated.

DAC Managing Partner Andrew King said in a statement, “May has traditionally been the peak sales month of the year, and the industry had originally expected monthly sales to surpass the 190,000-unit mark. However, that goal, which has not been achieved since May 2019, remains out of reach.”

DAC noted that the latest GDP data from Statistics Canada show the country has fallen into a technical recession, while its automotive industry had already been experiencing a tangible, real-world downturn in recent months.

In its June report, Pennsylvania-based automotive forecasting firm AutoForecast Solutions lowered its outlook, projecting that Canada’s new vehicle sales in 2026 will reach only 1.83 million units, a significant downward revision from the 1.91 million units forecast in May.

Among the 10 auto brands that publish monthly sales figures, Genesis, Hyundai, Kia, and Toyota achieved year-on-year sales increases.

Image source: Hyundai Canada

According to data from Hyundai Auto Canada, the combined sales of Hyundai and Genesis brands in Canada in May reached 16,004 units, setting a new record for the highest sales in May in the brand's history. Among them, Genesis sold 870 units, a year-on-year increase of 10.4%, marking the brand's highest monthly sales record. Hyundai brand sales were 15,134 units, a slight year-on-year increase of 0.8%.

Steve Flamand, President and CEO of Modern Canada, stated that the exclusive car purchase offers launched during the Modern Sunday Special Event in Ontario and the Modern Brand Experience Day in Western Canada are key factors in driving record-breaking sales.

Toyota Canada reported total May sales of 27,704 units, up 4% year over year, with electrified vehicles becoming the main sales driver: sales of electrified models reached 19,403 units that month, surging 50.3% year over year and accounting for 70% of Toyota’s total sales, setting a new monthly sales record for electrified vehicles.

After seasonal adjustment, Canada’s annualized new vehicle sales for the month came in at 1.78 million units, the lowest monthly level so far this year.

Weak new vehicle sales in Canada underscore mounting downward pressure on the macroeconomy: the country’s economy unexpectedly contracted in the first quarter, with annualized growth declining for two consecutive quarters, leading economists in the industry to widely conclude that it has entered a technical recession.