From the Magazine: Navigating geopolitical crosscurrents

What the latest developments mean for Canada’s automotive aftermarket

The couple of months have been another whirlwind of economic, geopolitical and political developments that are reshaping the business environment.

For the automotive aftermarket, these forces matter deeply. From the global supply chain to the neighbourhood repair shop, each layer of the sector ultimately reflects shifts in interest rates, consumer confidence, currency values and trade negotiations.

Understanding these linkages is critical for entrepreneurs and distributors operating within Canada’s aftermarket.

The monetary landscape

At its July 30 meeting, the Bank of Canada once again held its policy rate at 2.75 per cent, marking the fourth consecutive pause. The decision underscored the central bank’s delicate balancing act: On one hand, a slowing domestic economy with signs of labour market cooling; on the other, persistent risks of inflationary pressures driven by tariffs, currency fluctuations, and imported costs.

Tariffs remain the central wildcard. Their downstream impact is clear: Higher input costs filter through distributors and eventually reach Canadian consumers. A weaker Canadian dollar further amplifies these pressures, as it takes more Canadian dollars to buy imported goods, including aftermarket parts. A divergence between U.S. and Canadian bond yields also has consequences for the loonie, which remains vulnerable to monetary policy shifts.

By early August, sentiment had shifted. Evidence of a cooling labour market emerged both in Canada and the United States. The U.S. reported its weakest three-month job growth since the pandemic, with payrolls up only 73,000 in July and prior months revised sharply downward. At the Jackson Hole Economic Forum, U.S. Fed Chair Jerome Powell signalled a more dovish tone, suggesting the time may soon come for rate cuts to re-energize the business environment.

For Canada, an unemployment rate of 6.9 per cent reinforces the narrative of a slowing labour market. Combined with softening consumer sentiment and easing inflation momentum, the stage is being set for the next rate-cutting cycle.

For the aftermarket, trade stability matters. Distributors rely heavily on predictable cross-border flows of parts, technology, and equipment.

Geopolitical and trade dynamics

Beyond monetary policy, geopolitical developments are having a direct bearing on Canadian businesses. The Canadian government recently removed retaliatory tariffs on many U.S. goods under the CUSMA agreement, an effort to preserve trade stability with the United States, its most critical trade partner. This pragmatic move contrasts with less favourable trade outcomes other nations have faced when negotiating with the Trump administration, underscoring Canada’s need to maintain a balanced approach.

For the aftermarket, trade stability matters. Distributors rely heavily on predictable cross-border flows of parts, technology, and equipment. Even modest tariff shifts can alter sourcing strategies, squeeze margins, and impact the competitiveness of Canadian jobbers relative to U.S. distributors. In a business where pennies per part often matter, volatility in tariffs and currency values is no small concern.

The consumer and OE market backdrop

At the consumer level, sentiment has been trending downward. Canadians are facing higher costs for essentials, rising credit card debt and declining affordability. This has translated into caution around discretionary spending.

However, there is an important counterbalance: Consumers are increasingly reluctant to purchase new vehicles. With higher financing costs, tightening credit conditions and affordability constraints, many Canadians are opting to extend the life of their current vehicles. This has historically been a tailwind for the aftermarket, where repair and maintenance demand benefits from deferred new vehicle purchases.

At the same time, original equipment manufacturers are grappling with sales softness and margin compression, which can lead to pricing and supply chain adjustments that ripple into the aftermarket. Jobbers who can position themselves as reliable, cost-effective, and service-oriented partners will be well-placed to capture share as consumers hold on to vehicles longer.

Jobbers who can position themselves as reliable, cost-effective, and service-oriented partners will be well-placed to capture share as consumers hold on to vehicles longer.

Implications for jobbers, shops

So, what does this all mean for Canadian jobbers and shops navigating today’s environment?

• Neutral but resilient outlook: My sentiment for the aftermarket remains neutral, but importantly, not negative. While consumer caution limits upside, the fundamental trend of vehicle retention supports steady aftermarket demand.
• Product strategy matters more than ever: With consumers more discerning, product mix is critical. Stocking the right balance between premium and value-tier parts, ensuring access to fast-moving SKUs and offering solutions that help shops keep repair bills competitive will separate successful distributors from those who struggle.
• Currency and tariffs demand vigilance: Distributors should actively manage currency risk and monitor trade developments. Building flexibility into sourcing, whether through diversified suppliers, closer relationships with domestic manufacturers, or hedging strategies, can help insulate against shocks.
• Technology and efficiency as differentiators: Amid margin pressure, technology can be an equalizer. From inventory management systems to AI-driven demand forecasting, investing in efficiency is no longer optional for jobbers seeking to compete. Shops, too, are looking for partners who can help them streamline ordering, calibration, and workflow.
• Consolidation and M&A opportunities: Neutral industry growth combined with aging ownership demographics continues to create opportunities for mergers, acquisitions, and private equity activity. Multi-shop operators in collision, glass and mechanical are increasingly looking to expand footprints, and distributors who can provide scale and consistency stand to benefit.

While macroeconomic and geopolitical currents create uncertainty, they also create opportunities for those willing to adapt.

Time for disciplined entrepreneurship

The automotive aftermarket has always been a resilient sector, and today’s environment is no different. While macroeconomic and geopolitical currents create uncertainty, they also create opportunities for those willing to adapt.

Jobbers and shop owners who remain disciplined — carefully managing product strategy, watching costs, and aligning with trusted suppliers — will not only weather the current environment but position themselves to thrive when monetary easing and consumer sentiment eventually improve.

For entrepreneurs in the Canadian aftermarket, resilience is built not on predicting every policy move or trade negotiation, but on building flexible, customer-focused businesses that can adapt to whatever backdrop emerges next.

Zakari Krieger is the Fix Network, Canadian vice president of Prime CarCare, responsible for the Canadian retail business, encompassing the Speedy Auto Service and Novus Auto Glass business lines

This article originally appeared in the September 2025 issue of Jobber News