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Economic Viewpoint

Canada’s Auto Market is Out of Balance: Price Pressures Intensify

April 5, 2022
Hélène Bégin
Principal Economist

2021 promised to be an excellent year for the auto sector after the plunge in sales experienced at the start of the pandemic. The economy’s unprecedented deterioration in spring 2020 had cooled demand for vehicles, but those impacts quickly dissipated. Last year, the buyers were there, but supply problems slowed Canadian dealer sales. Sales delays lengthened and price increases were especially steep for some new and used vehicle models. Will the overheating situation resolve soon? That will depend on whether the supply starts to get back to normal. For now, production and inventory indicators are showing little signs of improving, while demand remains strong.