Why new vehicle prices are finally cooling off

The steady climb in average transaction prices for new light vehicles stalled in 2025 after several years of sharp increases, new data show.

Average transaction price fell 0.6 per cent in 2025 to $53,400, according to new analysis from DesRosiers Automotive Consultants. That ends a run that saw prices rise by more than 30 per cent between 2019 and 2024.

But the drop-off appears to largely be the result of decreased sales of higher-priced battery electric vehicles. Light trucks, which dominate the Canadian market with an 88 per cent share, also recorded a 0.6 per cent decline, while passenger car prices dropped more sharply, down 1.4 per cent on much lower sales volumes.

DesRosiers highlighted several factors that combined to halt the recent gains. Inventory levels returned to full supply, easing pricing pressure, while sales of battery electric vehicles declined. BEVs remain more expensive than internal combustion models, the consultancy noted, and their pullback reduced upward pressure on average prices. Canadian counter‑tariffs also disproportionately affected the luxury segment, contributing to steep sales declines for some manufacturers, notably Tesla.

Shifts within vehicle segments also played a role. Full‑size pickups lost share to compact trucks, DesRosiers reported, while compact and intermediate SUVs ceded ground to subcompact SUVs, helping keep light‑truck prices in check despite continued consumer demand.

Regional trends varied. Quebec recorded a 1.7 per cent decline in average transaction prices in 2025, driven largely by weaker sales of higher‑priced BEVs. Ontario saw a 0.8 per cent decrease compared with 2024. Alberta bucked the national trend, posting a 1.1 per cent increase, as the slowdown in BEV sales had less impact in the province’s ICE‑heavy market.

“The decrease in transaction prices is in part the result of consumers pulling back from the BEV market in 2025,” said Andrew King, managing partner at DAC. “The market outlook in 2026 is complex with a partial recovery in BEV sales, but ongoing trade conflicts and rising gas prices also impacting the sales mix.”

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