04.28.2025

Navigating Canada’s 2025 Used Car Supply Crunch: Top Remarketing and Inventory Strategies

Across Canada, 2025 is shaping up as a year of unprecedented complexity for used car remarketing and inventory management teams. While some headlines tout the return of new vehicle inventory, the reality beneath is a tightening noose on used supply—fuelled by pandemic-era production disruptions, consumer habit shifts, new tariff regimes, and evolving demand for electrified vehicles. For automotive businesses, especially those managing risk, remarketing, or inventory portfolios, the winners will be those who navigate these challenges with precision, flexibility, and a clear view of the market ahead.

Aerial shot of an organized parking lot filled with cars in Seattle, WA.

The 2025 Used Vehicle Landscape: Forces Shaping the Crunch

First, let’s level-set. From 2020 to 2023, Canadian new car sales ran 25% below normal due to semiconductor shortages and factory slowdowns, leading to a significant deficit of future used supply for today. Many lease-holders held onto vehicles, further reducing the off-lease pipeline. Now, even as new inventory has rebounded, there’s a supply lag of roughly 1 million vehicles nationwide—a deficit the market won’t quickly make up.

Layer on top volatile exchange rates, upcoming U.S. trade policies impacting import costs, and a fast-shifting mix of gas, hybrid, and electric demand—and it’s clear conventional playbooks for remarketing and inventory don’t cut it anymore.

1. Redefine Sourcing: Casting a Wider, Smarter Net

Relying on traditional channels—lease returns, scheduled trades, and familiar auctions—won’t suffice in 2025. To secure the inventory Canadians want, remarketers must diversify their acquisition approach:

  • Strengthen relationships with fleet and rental operators. Many fleets are slowly cycling out pandemic-era units. Early outreach and creative take-back programs, possibly sweetened by flexible financing or remarketing partnerships, can bring these vehicles into your pipeline before the competition.
  • Enable private party purchases. As more retail sellers look to take advantage of high used prices, make it easy for them to sell vehicles to you. Consider digital appraisal tools that let sellers remotely submit condition and history info. Our online valuation suite at Canadian Black Book makes this capacity available to progressive dealers and remarketers who want an edge. Try Value Your Vehicle.
  • Leverage strategic auction participation. Regional differences now matter more: while prairie markets may still be inventory-constrained, Toronto and Vancouver have pockets of normalized supply, especially in light-duty pickups and SUVs. Target your auction strategies accordingly rather than playing the old national averages.
  • Innovate on lease-end incentives. To keep the CPO pipeline flowing, consider loyalty or trade-up offers for lessees to bring vehicles back early. Actionable trade-in APIs, like those we offer via Canadian Black Book, can streamline this process for consumers and dealers alike. See TradeMax for more details.

2. Fine-Tune Pricing with Precision, Not Gut Feel

With average used prices hovering around $35,000—almost double a few years ago—and significant inter-provincial variance, adaptive pricing is no longer optional. Here’s how we see market-leading teams thriving:

  • Respond in real time to market signals. Gone are the days of monthly check-ins. Monitor listing and wholesale price changes weekly, leveraging platforms like CBB Pulse for visualising market trends and competitive landscape by segment, geography, and even trim level.
  • Don’t just chase the pack: lead with VIN-specific accuracy. Shortages are often trim-specific (e.g., loaded pickup trucks in Western Canada, compact fuel-efficient sedans in urban Ontario). Use enhanced vehicle matching tech to decode VINs right down to option codes, ensuring your price and marketing are laser-targeted to consumer demand.
  • Future-proof for tariffs and supply-side shocks. Recent trade policy disruptions have driven Canadian new and used car prices as high as 6% beyond 2023 norms. Mitigation? Balance your portfolio with a greater focus on North American-assembled vehicles, and dynamically shift pricing to highlight low-tariff, high-demand models as policy winds shift.
  • Anticipate the electric and hybrid adjustment period. We’re watching a subtle oversupply build in lightly used EVs and plug-in hybrids as lease returns trickle back. Prepare to adjust downward—not just by price, but also by value messaging, warranty offerings, and charging inclusion—to clear aged ZEV stock before future incentives expire or manufacturer discounts hit.

3. Segment Smartly: Prioritise What Sells, Move What Doesn’t

Every VIN in your inventory should come with a market-backed game plan. In a supply crunch, tie your portfolio mix directly to real demand:

  • Trucks and SUVs: Silverado, F-150, RAV4—these household staples are stabilising but not immune to spot shortages in higher trims. Use retail market insights to pinpoint which geographic markets are paying premiums for certain packages, and pipeline inventory accordingly.
  • Sedans and budget vehicles: As affordability pinches, efficient under-$25K vehicles are drawing renewed interest. Don’t overlook older hybrids and compacts; accurately recondition and highlight their total-cost-of-ownership advantages in your listings.
  • Electrified and alternative powertrains: Don’t chase the EV wave blindly. Instead, assess residual risks using scenario planning tools, taking into account long-term demand, government policy plans, and upcoming lease returns. Our Residual Sensitivity Analysis can help model various what-ifs before you over-invest in a trending segment.

4. Plan for 2026 and Beyond: Future-Proofing the Pipeline

If your focus is only on the immediate crunch, you’ll be left flat-footed by what’s next. True market leadership demands that we look past Q4 2025 to the larger waves forming:

  • Track demographic and immigration trends. With Canada’s population surging (particularly among young, urban families), expect increasing demand for midsize SUVs and affordable multi-use vehicles. Align your sourcing with census-led projections to secure the right stock before prices rise further.
  • Upskill for electric vehicle maturity. The next wave of off-lease EVs will stress remarketing, technician capacity, and consumer confidence. Now is the time to equip your team for battery health appraisals, charger infrastructure support, and education-driven sales approaches.
  • Balance risk with diversified supply. If tariffs and geopolitics remain unsettled, a prudent portfolio strategy is critical. Consider targeting at least 15% of your overall mix to Canadian- or U.S.-sourced vehicles and monitor exposure regularly.

5. Maximise Profitability with Data-Driven Decisions

Surviving volatility in 2025 is about more than having cars—it’s about having the right cars, at the right price, in the right place. That’s only possible with a sophisticated approach to data and analytics. At Canadian Black Book, we’ve built our reputation on helping automotive professionals:

  • Forecast residual values accurately to inform remarketing timelines and set optimal auction reserves. Tools like our Residual Studies ensure your portfolio configuration is both market-driven and risk-mitigated.
  • Understand hyperlocal market movements using Canadian retail listing and wholesale data that’s updated daily and accessible through flexible APIs.
  • Integrate seamlessly with your existing systems, empowering your teams with direct access to Canadian Black Book valuation and trade-in data at any customer touchpoint. Developer resources and documentation can be found in our API portal.

In today’s Canadian market, actionable insight is your competitive edge—so don’t settle for guesswork or outdated benchmarks.

Conclusion: The Data-Driven Future of Canadian Remarketing

The 2025 used car supply crunch is more than a headline—it’s a lived reality for dealership leaders, risk officers, and remarketing professionals. But it’s also an opportunity to redefine how we approach inventory, pricing, and risk. Those who excel will be those who adapt fastest: embracing expanded sourcing, relentless data monitoring, tactical pricing, and future-focused scenario planning.

As thought leaders who have served the Canadian market for generations, we invite you to connect with the Canadian Black Book team for practical, tech-enabled guidance and the most precise market insights in the industry. Together, let’s transform challenge into competitive advantage.

Explore our full suite of valuation and analytics solutions at Canadian Black Book and power your next strategic move with confidence.

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