02.10.2026
Canadian Black Book 2026 Outlook: Market Stabilizes as Tariffs and EV Shifts Reshape Demand
February 10, 2026 (Markham, ON) – After several years of sharp volatility, the Canadian automotive market enters 2026 in a more measured phase, though not without continued pressure points. According to Canadian Black Book’s 2026 market outlook, used-vehicle values are beginning to stabilize, even as tariffs, affordability constraints, shifting fleet behavior, and evolving electric-vehicle dynamics continue to reshape demand across the market.
Canadian Black Book forecasts total new light-duty vehicle sales of approximately 1.87 million units in 2026. Used-vehicle supply for vehicles zero to eight years old is expected to decline by 2.6%, remaining well below levels required to meaningfully ease affordability pressures. Retail incentive spending is projected to average 9.4% of Equipped Retail Price, while lease penetration is expected to reach approximately 30% of total retail sales.
“For the first time in several years, the Canadian used-vehicle market is beginning to find its footing,” said Daniel Ross, Senior Manager of Industry Insights and Residual Value Strategy at Canadian Black Book. “Depreciation is becoming more predictable, retention levels are normalizing, and volatility is easing. That said, performance continues to diverge sharply by segment, powertrain, and vehicle age.”
Canadian Black Book expects the Used Vehicle Retention Index to decline further in early 2026 before leveling out after the first quarter. Overall used-vehicle depreciation is forecast at 14.5%, slightly improved from 2024 but more broadly distributed across segments. Four-year retained values are projected to average 54.7%, reflecting elevated transaction prices and structurally higher residuals compared with pre-pandemic norms.
“Even as values cool, the market has fundamentally changed,” Ross said. “Higher vehicle prices, richer trims, and an aging vehicle parc continue to support stronger residuals than we saw before 2020.”
Fleet behavior remains a critical factor shaping supply. While fleet sales remain below pre-pandemic levels, higher acquisition costs have extended holding periods and increased average mileage. Despite this, consumer acceptance of higher-mileage fleet vehicles remains strong, helping support late-model used values.
Electric vehicles remain one of the most dynamic and fragmented areas of the market. Following the removal of federal iZEV incentives and provincial rebate reductions, ZEV market share declined sharply in early 2025 before stabilizing. Canadian Black Book expects used EV supply to grow as off-lease vehicles return to market, with EVs projected to account for approximately 11% of used-vehicle supply. Meanwhile, gas-powered vehicle share is expected to contract by a similar margin as hybrids and plug-in hybrids gain ground.
“A wave of off-lease EVs, combined with changing incentive structures and new lower-priced entrants, is forcing a reset in EV economics,” Ross added. “That reset creates opportunity for consumers, but also introduces risk for retained values, particularly if pricing pressure accelerates.”
Tariffs introduced in 2025 are expected to become more visible to Canadian consumers throughout 2026 as cost increases flow through to monthly payments. While Canadian-operating OEMs have shown resilience, affordability remains the defining challenge for the year ahead.
Canadian Black Book’s 2026 outlook highlights a market that is stabilizing yet increasingly segmented, where value is driven by vehicle type, powertrain mix, price point, and consumer financial conditions.
About Canadian Black Book
For 60 years, Canadian Black Book has been the trusted and unbiased Canadian automotive industry source for vehicle values. Today the company has grown into a leading data provider of vehicle valuations, residual value forecast solutions, and VIN decoding. Canadian Black Book tools and information are considered ‘The Authority’ for vehicle values not only by car dealers and manufacturers but also the leasing, finance, insurance, and wholesale sectors. In 2020 Canadian Black Book brought to market its Enhance Vehicle Matching (EVM) solution, which will allow the industry to decode more consistently 17 digits VINs down to a specific trim package allowing a more precise vehicle valuation.
For more information or interview requests please contact:
Kiim Breidenbach
VP, Marketing and Communications
770-533-5266
kbreidenbach@blackbook.com
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