07:10 AM EST, 11/07/2025 (MT Newswires) -- Canadian auto sales slowed in October to 1.81 million units, or 2.8% month over month, at a seasonally adjusted annualized rate (SAAR) according to Omdia, formerly Wards Automotive, said Scotiabank.

Meanwhile, auto sales in non-seasonally adjusted terms were 151,000 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, noted the bank.

Borrowing costs have inched down in recent months, as the Bank of Canada cut the policy rate by 25 basis points at a second consecutive meeting, lowering the overnight rate to 2.25% on Oct. 29, which is at the bottom of the BoC's estimated range of a neutral policy rate.

However, these two cuts to the policy rate were more of an insurance against weak incoming data and outlook, pointed out Scotiabank. With core measures of inflation running between 2.5% and 3% year over year, Canada's central bank is unlikely to cut further absent a greater deterioration in the outlook.

On Tuesday, the federal government unveiled Budget 2025, which includes larger deficits with the aim of increasing 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 abstention votes to pass the budget, added the bank.

Meanwhile, the budget mentioned that the next steps on electric vehicles (EV) 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 didn't mention bringing back the iZEV program, which ran out of funding at the beginning of this year.

Scotiabank's outlook for Canadian light vehicle sales, which the bank is in the process of revising, is 1.89 million in 2025 and 1.84 million in 2026. The automotive sales rate is expected to remain soft through the end of 2025, compared with the spring, as softer labor markets pose headwinds to consumer spending growth.