CANADA: AWAITING NEXT STEPS FOR EVs PENDING THE 60-DAY EVAS REVIEW
Canadian auto sales slowed in October to 1.81 mn units (-2.8% month-over-month) at a seasonally adjusted annualized rate (SAAR) according to Omdia, formerly Wards Automotive (chart 1). Meanwhile, auto sales in non-seasonally adjusted terms were 151 k for October, down by -3.4% year-over-year. Annual growth in vehicle sales continues to ease through the second half of the year, after a strong start to 2025, at least some of which is likely due to demand that was pulled forward in the spring by consumers looking to front-run any potential tariff distortions to price and supply.
Borrowing costs have inched down in recent months, as the Bank of Canada cut the policy rate by 25 basis points (bps) at a second consecutive meeting, lowering the overnight rate to 2.25% on October 29th which is at the bottom of their estimated range of a neutral policy rate. However, these two cuts to the policy rate were more so insurance against weak incoming data and outlook. With core measures of inflation running between 2.5% and 3% y/y, the BoC is unlikely to cut further absent a greater deterioration in the outlook.
On November 4th, the federal government unveiled Budget 2025 which includes larger deficits with the aim to increase investments in capital, and reduced non-permanent resident immigration targets. It will likely be an extended period before seeing the full benefits from building the infrastructure and capital, assuming the minority Liberal government receives enough support, or abstained votes, to pass the budget.
Meanwhile, the budget mentioned that next steps on electric vehicles will be shared following the 60-day review of the Electric Vehicle Availability Standard (EVAS) policy, which was announced in September when the government removed the 2026 target of 20% sales being zero emission vehicles. The budget did not mention bringing back the iZEV program which ran out of funding at the beginning of this year.
Our outlook for Canadian light vehicle sales, which we are in the process of revising, is 1.89 mn in 2025 and 1.84 mn in 2026. The automotive sales rate is expected to remain soft through the end of 2025, compared to the spring, as softer labour markets pose headwinds to consumer spending growth.
UNITED STATES: SUPREME COURT BEGINS REVIEWING IEEPA TARIFFS
US auto sales in October increased 0.7% month-over-month in seasonally adjusted terms to 15.9 mn units at an annualized rate according to Omdia, formerly Wards Automotive (chart 2). Non-seasonally adjusted sales were down by -4.5% year-over-year in October but remain up 3.8% year-to-date amid resilience despite tariff headwinds.
The ongoing US federal government shutdown, which began October 1st, continues to impact public spending and services, including the release of federal data on jobs and inflation that is key to the Federal Reserve’s mandate. However, CPI inflation data for Q3 was published October 24th, since it is used to compute spending plans for next year, and showed both headline and core inflation remain around 3% y/y. The US Federal Reserve cut the policy rate by 25 bps again to 4% at the October 29th meeting amid risks of slowing jobs, but warned that they are not on a predetermined path of cutting rates.
On November 5th, the US Supreme Court began hearing oral arguments around the Trump administration’s use of IEEPA to impose broad-based tariffs, and could take months to reach a decision. Lower courts had ruled against the IEEPA tariffs. The case does not review tariffs imposed via section 232 which includes autos and auto parts.
Our outlook for US auto sales, which we are in the process of revising, expects the quarterly sales rate to ease into the new year given the softer labour market, resulting in 16.2 mn sales in 2025 and 15.9 mn in 2026.
GLOBAL AUTO SALES: FLAT Q3 AS HIGHER SALES IN EUROPE OFFSET ELSEWHERE
Global auto sales increased by 1.8% m/m (SA) in September, supported by growth at the regional level in all regions tracked except North America (chart 3). In Q3, auto sales were mixed at the regional level, as higher sales in European markets were offset by softness elsewhere, resulting in flat global sales (0% quarter-over-quarter). In western Europe, auto sales increased by 7.4% m/m (SA) in September, and recent volatility in monthly sales increased 1.3% quarter-over-quarter (q/q) in Q3. In eastern Europe, auto sales increased by 2.1% m/m (SA) in September, and increased 10.4% q/q in Q3, recovering in line with the 2024H2 sales rate after soft sales in 2025H1. In the Asia Pacific region, auto sales increased by 2.2% m/m (SA) in September, but declined by -1.0% q/q in Q3 as sales have generally trended sideways for the past six months. Sales in China increased 1% in September but fell by -0.5% q/q in Q3. In the Latin American region, vehicle sales increased by 3.7% m/m (SA) in September, and pulled back -0.7% q/q in Q3. We are reviewing our outlook for global vehicle sales, which expected growth of 2.2% in 2025 and 0.9% in 2026, as tariffs and uncertainty pose headwinds towards the global outlook (chart 4).
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