Canadian Auto Dealers Split on Chinese EVs: Who's In, Who's Out

The Dealer Network: The Real Bottleneck

Everyone talks about tariffs, quotas, and prices. But the factor that will determine whether Chinese EVs succeed in Canada is the dealer network. And the picture is nuanced: roughly half of Canada's large dealership groups are actively pursuing agreements with Chinese automakers, while the other half is taking a cautious approach.

BYD has hired Dealer Solutions M&A, a consulting firm based in Markham, Ontario, to identify and recruit dealer partners. The initial plan targets 20 sales points in the first year, starting with the Greater Toronto Area, then Vancouver, Montreal, and Calgary.

Why Some Dealers Are Jumping In

Dealership groups actively negotiating with BYD and Chery see several opportunities:

Attractive margins — Chinese automakers are reportedly offering 8-12% margins per vehicle, above the 4-6% typical with traditional manufacturers. For a dealer selling a BYD Seal at $44,990, that represents $3,600 to $5,400 in gross margin per unit.

Virgin territory — Being the first BYD dealer in a Canadian city offers a first-mover advantage that is hard to replicate. Toyota dealers built empires in the 1980s by being the first to believe in Japanese brands.

Predictable volume — With a quota of 49,000 vehicles in the first year, demand will exceed supply. Every allocated unit will likely sell, a luxury traditional dealers no longer enjoy.

Diversification — Multi-brand groups are looking to reduce dependence on any single manufacturer, especially after Stellantis turbulence and the uncertain EV transition of some American automakers.

Why Others Are Holding Back

Cautious dealers also have solid arguments:

Reputational risk — Associating one's name with a Chinese brand in a tense political climate could alienate part of the existing customer base. Some dealers fear a boycott of their traditional brands.

Uncertain after-sales service — No parts supply network yet exists in Canada for Chinese EVs. Dealers will need to invest in technician training and parts inventory with no guarantee of quick return on investment.

Upfront investment — BYD reportedly requires $2-5 million per dealership for renovations, diagnostic equipment, and staff training. That is a significant bet on a brand with zero Canadian track record.

The warranty question — Who absorbs warranty costs if BYD decides to leave the Canadian market? Dealers would be left with unhappy customers and no manufacturer support.

Chery's Different Strategy

Unlike BYD, which targets large groups, Chery appears more open to working with dealers of varying sizes. This approach has its advantages: faster geographic coverage and local partners more invested in the brand's success.

Chery is preparing to enter Canada with three sub-brands: Omoda (trendy compact SUVs), Jaecoo (adventure SUVs), and potentially Exeed (premium). Each sub-brand could have its own distribution network, multiplying opportunities for dealerships.

The Blueprint: How Australia Did It

Australia offers an instructive precedent. BYD launched sales there in 2023 with a mixed network: traditional dealers in major cities and direct "experience centres" in commercial areas. The result? BYD became Australia's third-largest EV seller within 18 months.

In Canada, a similar hybrid model could emerge: traditional dealers for sales and service, complemented by urban showrooms for brand discovery.

To understand BYD's overall plan for Canada, see our article on BYD's 20 dealerships. For Chery's plans, read our article on Omoda and Jaecoo in Canada.

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