Crowe MacKay LLP is the only Canadian Member of this group of CPA firms that focus on Automotive Industry issues and services. For more about the Group and other news contact Conven Tang ([email protected]) in our Edmonton office.

 

Industry

• Sale of 16.2M units in 2025, projected to be 15.8M units in 2026.
• Gross down 3.0% to $5,600 in 2026 Q1 for new compared to 2025 results.
• Gross for F&I products up 1.5% in 2026 Q1 to $2,310.
• Gross for F&I products up 1.5% in 2026 Q1 to $2,310.
• Despite service retention dropping 23% from 2023 to 2025, gross profit in fixed operations grew by 8.9%.
• Stabilization in net profit as the average has been around $4M in the past few years.
• Carvana coming on strong with 17,500 units sold in 2025.
• Lease returns starting to increase (2.6M units estimated for 2026) to supply the used vehicle market.
• Lexus with the lowest inventory at 34 day and CDJR with the highest at 108 days.
• Big increase in global units sold as manufacturers in China exporting large volumes worldwide putting pressure on legacy manufacturers.
• Increase in recent gas prices driving demand for EVs once again.

Mergers and Acquisitions

• Still lots of room for consolidation as there are over 90% of dealers owing 1 – 10 rooftops.
• Eastern and Southern US are hotspots for transactions at the moment.
• 2026 Q1 saw 134 rooftops exchange hand over 94 transactions.
• Top 150 dealers represented 79% of the buy/sell market in 2025.
• Transactions in 2026 Q1 represented by 40% domestic (51% - 2025), 20% luxury (22% - 2025) and 40% import (27% - 2025).
• In market acquisitions strongly favoured over out of market acquisitions especially with public companies.
• Public companies maintain $8B in liquid capital year round for purchasing activity.
• Dealer sentiment about 2026 is similar to 2025 based on Kerrigan Advisors Survey.
• Higher dealer trust with the manufacturer increases the goodwill valuation of the dealership.
• Valuation of luxury brands increased with the exception of Porsche due to facility requirements. CDJR, Acura, Nissan, Infiniti, Volvo and VW all saw decreases. Others remained steady.
• Image upgrades playing a large part on buy/sell approvals by the manufacturers.

Legal

• Direct sales by legacy manufacturers under different branding is no longer being pursued.
• Warrantee guides including labour rates and parts mark up has been addressed.
• GM settled with dealers regarding parts markup on certain EV parts.
• Performance letters coming out again to GM and Nissan dealers. Dealers need to respond in order to keep a paper trail and to document changes in operations.

Technology and AI

• Amazon Auto has launched in the US with mainly Hyundai dealers signing on thus far.
• Capital spending on Tech and AI in the US expected to be in excess of $170B in 2026.
• As AI progresses, many tools and subscription services will become obsolete.
• Once AI is able to write its own code and fix its glitches, many software companies will end up folding.
• AI will lead to a significant number of one off systems in the future making troubleshooting a lot harder when something goes wrong.
• AI being used by hackers to infiltrate systems and firewalls to access data base. Many insurance companies are dropping cybersecurity coverage if the dealer does not have a process in place to train employees, to monitor systems and to test controls.

The 2040 Vision Study is now available on the Auto Team America website at www.autoteamamerica.com

Toyota has halted development of the Lexus LF-ZC, a next-generation electric vehicle originally expected to launch in mid-2027, as the automaker reassesses EV demand, profitability targets, and the impact of the disappearance of U.S. subsidies. Toyota first unveiled the LF-ZC concept in 2023 and initially planned to introduce the vehicle in 2026 before later reports suggested the launch had shifted to 2027. The model was expected to serve as a technology showcase for Lexus, featuring gigacasting manufacturing processes, lower-cost battery systems, and faster charging capabilities.

Source: CBT News

Stellantis announced a strategic technology partnership with U.K.-based self-driving startup Wayve to integrate the company’s AI Driver into the automaker’s STLA AutoDrive platform, per a May 21 press release. The initial integration with Stellantis’ AutoDrive platform will support Level 2+ door-to-door supervised and hands-free driving for both highways and urban environments and is targeted to launch in North America in 2028. Early development on Stellantis vehicles has already started, per the release.

Source: Wards Auto

In a giant testing lab filled with huge spikes, Volkswagen is putting one of the new cars it has designed especially for China through its paces. But the biggest test is still to come: Will Chinese drivers want to buy them? The vehicles being assessed here at Volkswagen’s sprawling development center belong to a coming generation of China-focused models that the automaker is betting can revive its fortunes in the world’s biggest car market.

Source: Wall Street Journal

Inventory and Trade-In Satisfaction Improve

The vehicle-buying experience improved significantly in May following a sharp decline in April, as shown in the latest CDK Ease of Purchase Scorecard. The overall ease-of-purchase score increased to 87% in May, rising from 81% in April and nearly matching March’s score of 88%. According to the findings, in May, buyers reported finding their preferred vehicles much more easily, with 80% of consumers stating that locating their desired vehicle was easy. A notable increase from April’s 69%. This result surpassed the 2025 average of 77% and represented the highest score recorded in 2026.

Source: CBT News

A spring survey of U.S. consumers shows they’re concerned about the financial hit of buying a car today, but the findings also reveal ample opportunity to sell protection products. Finance-and-insurance product provider Protective Asset Protection polled more than 3,000 drivers in April on their views about financial conditions and vehicle protection plans. The results showed 69% were concerned about finances as they bought their vehicles. The silver lining in the stark finding came when consumers shared their likelihood of paying for protection products: 29% said today’s economic conditions make them more likely to do so.

Source: F&I Showroom Magazine

Volvo Car said global sales fell 5.5% on year in the three months to the end of May. The Swedish automaker, which is majority-owned by China’s Zhejiang Geely Holding Group, sold 178,980 cars in the period, down from 189,440 in the same three months the year prior, it said Wednesday. “The automotive industry, including the premium segment, continues to face intensifying headwinds across regions which reflected in the sales performance,” it said.

Source: Wall Street Journal

A coalition of automakers, retailers, technology companies and medical device manufacturers is urging the federal government to address a growing shortage of memory chips driven by artificial intelligence data centers. As reported by Reuters, the Alliance for Automotive Innovation, the National Retail Federation, the Medical Device Manufacturers Association and the Internet and Television Association (NCTA), sent a letter to the U.S. Treasury and Commerce Departments expressing concerns about an urgent imbalance in the market for memory chips.

Source: CBT News

Major automakers are supporting the Environmental Protection Agency’s (EPA) proposal to delay enforcement of stricter vehicle emissions standards by two years, arguing that current regulations no longer align with market realities. The Alliance for Automotive Innovation, which represents major manufacturers like General Motors, Ford, Stellantis, Toyota, Volkswagen and Hyundai, told regulators that a delay is necessary while the agency develops updated long-term standards.

Source: CBT News