The U.S. is holding Canadians back from getting better cars, now is the time for Ottawa to change that

Globe and Mail

22-05-2025

Americans, for the most part, dictate which cars Canadians do and don't get to buy. It's not fair or even smart, necessarily. It's just the way it is and has been for decades.
Through a web of business decisions and regulations – safety and emissions standards – Canadians are beholden to the peculiar predilections of American drivers who typically enjoy cheaper gasoline and big SUVs.
Were it not for the Americans, Canadians could enjoy a greater variety of cars that are smaller, cleaner, cheaper and with niche appeal – cars that might even be better than what's currently on offer. For starters, there's the smaller (and cheaper) Volkswagen ID.Buzz sold in Europe, the budget-friendly Fiat Grande Panda hatch, the reborn Renault 5 and any number of practical MPVs and station wagons.
Given the volatile nature of the person currently living in the White House, his chaotic dismantling of environmental policy, not to mention his devastating and ongoing attack on Canada's auto workers, it shouldn't be this way. We should no longer rely on America to dictate which cars we do and don't get.
If a vehicle is deemed good enough for European drivers, it should be good enough for Canadians, too. Ottawa should quickly move to allow the sale of vehicles certified for use in Europe and potentially other countries as well.
The Canadian Automobile Dealers Association (CADA) suggested exactly that last month in its Automotive Competitive Framework, a series of policies meant to support the auto industry and address the consumer affordability crisis. The association, which represents 3,200 dealers employing 178,000 people across Canada, urged the federal government to accept the vehicle compliance certificates of Japan, South Korea and the European Union, in addition to U.S. certificates.
'If a vehicle has been deemed environmentally okay and safe enough to be driven on a German Autobahn at over 200 kilometres an hour, are you going to say that vehicle is not safe enough to be driven in Canada? Come on,' said Tim Reuss, CADA's chief executive officer.
Expanding Canadian homologation regulations (a certification that says the vehicle is roadworthy and meets government criteria) isn't difficult to implement, said Reuss, who has previously held top jobs at the Dilawri dealership group and Mercedes-Benz Canada.
'We're talking about political will and paperwork,' he said.
Transport Canada's Motor Vehicle Safety Standards would have to be expanded to align with selected global jurisdictions, just as they're currently with the U.S. Federal Motor Vehicle Safety Standards.
'This is something Canada can do on [its] own,' Reuss said.
Dealerships would get more products to sell and Canadian drivers would get more choice.
There are some key nuances to be worked out, of course. For example, only vehicles from jurisdictions with high environmental standards should be accepted, so as not to undermine Canada's climate goals.
Regulators would also have to take great care to design the regulations in a way that doesn't undermine Canada's domestic auto manufacturing industry. Perhaps quotas on vehicles from certain jurisdictions would be required. Chinese cars, even if they're certified in Europe, could still be subject to hefty tariffs and/or some kind of carbon border adjustment. If done correctly, however, the policy is a win-win for car dealers and consumers.
'If these regulations change, it would be almost immediate that these brands would [bring in new models],' Reuss said. 'They already know what vehicles they would bring in.'
New automakers would also likely enter the Canadian market, he added.
So, if these car models and brands would sell in Canada, why aren't they already here?
There are 50 million reasons. That's roughly what it costs – about $50-million – for automakers to certify a new light-duty vehicle for sale in Canada that isn't already certified in the U.S., Reuss said.
Most of the cost comes down to the big stuff such as emissions and crash certification, he explained. Other things – such as ensuring the speedometer is in kilometres-per-hour and adding daytime running lights – are relatively minor costs.
Reuss wouldn't name the brand, but he recalls one instance where the dealers estimated they'd be able to sell 10,000 or 15,000 of a particular new model already available elsewhere in the world. For comparison, the Ford Escape was the 10th best-selling vehicle in Canada last year, selling about 30,000 units, while Subaru sold about 16,000 Foresters.
The automaker decided the unnamed model wouldn't be a good fit for the U.S. market and, because of the high cost of certification, there was no business case for bringing it into Canada.
'The core of the market is still very, very similar to the U.S., don't get me wrong,' Reuss said. 'Canada is still a pickup market and will continue to be heavily skewed towards SUVs. But is there opportunity in and around that to expand? Yes.'
He says the hatchbacks market is ripe for expansion.
'Canadians love hatchbacks but calling something a hatchback that's the kiss of death in the U.S. market,' said Reuss. That explains why there are almost no hatchbacks left in Canadian showrooms.
In Europe, drivers enjoy the brilliant new Renault 5 electric hatchback as well as its sporty Alpine A290 cousin. The simple little Honda e hatch was recently discontinued, but if regulations change in time Canadians could get its successor.
If you were intrigued by the US$27,500 electric pickup truck promised by U.S. startup Slate Auto, you might also be interested in Toyota's IMV 0. It's a compact US$10,000 gas-powered pickup, a relative of the much-loved Toyota Hilux, intended for emerging markets.
Similarly, Volkswagen's retro-future electric ID.Buzz minivan is wonderful, except that it's too big and too expensive for most drivers. In Europe, VW sells a smaller, cheaper version – it's even available as a small cargo van – but, there are currently no plans to bring the smaller ID.Buzz into Canada, according to a company spokesperson.
Fans of simple, lightweight sports cars (me) pine for the reborn Alpine A110. If all the forbidden-fruit cars of Europe were suddenly available here, this wildly impractical machine might be the first one I'd want to put in my garage. Or maybe it'd be the BMW M3 Touring or the deranged Renault 5 Turbo 3E or the petite Suzuki Jimny.
According to CADA, almost all manufacturers – including American ones – support the idea of opening Canada up to vehicles certified in Europe, Japan and Korea.
'This idea is nothing new. It's been talked about for quite some time, but now is the right environment to push it through,' Reuss said.
Given the damaging tariff threats coming from Washington, Canada should untie itself from America's vehicle regulations and seek new global trade partners. We can and should harmonize automotive homologation with other countries, in addition to the U.S. Even with his minority government, this is some paperwork the newly elected Prime Minister Mark Carney should be able to push through.
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