How to Start an Automotive Business in Canada?: Process & Cost

Introduction

The flourishing automotive sector in Canada offers a multitude of prospects for businesspeople seeking to launch a successful enterprise. As one of the world’s top vehicle producers, Canada offers a robust market for traditional dealerships, repair services, spare parts suppliers, and emerging electric vehicle (EV) businesses. With a skilled workforce, strong trade networks, and government-backed EV incentives, the sector is primed for growth.

Foreign investors are increasingly drawn to Canada due to its stable economy, free trade agreements with the U.S. and EU, and supportive policies for automotive innovation. Whether launching a dealership, service center, or EV charging network, entrepreneurs can tap into a market contributing over $12.5 billion to Canada’s GDP.

Through this blog, we will be covering the key steps to start an automotive business in Canada, along with the documents required and costs to start your business. 

Why Start an Automotive Business in Canada?

Canada is one of the world’s most promising countries for launching an automotive venture. From traditional car dealerships to EV servicing and spare parts businesses, the market is thriving and ripe with opportunity.

Here’s why foreign entrepreneurs and investors are increasingly choosing Canada to enter the automotive and electric vehicle sectors:

1. A Thriving Automotive Sector

Canada ranks among the top 12 global light vehicle producers, contributing over $12.5 billion to its GDP. The sector directly employs 117,200+ professionals, with even more in the aftermarket and dealership ecosystem.

2. Skilled Automotive Workforce

Renowned institutions like Georgian College offer specialized automotive programs, ensuring a highly trained talent pool for sales, repairs, EV servicing, and management.

3. Free Trade & Global Access

Canada’s free trade agreements with the U.S., EU, and Asia-Pacific markets make it a strategic gateway for global automotive trade.

4. EV Opportunities

Canada is aggressively investing in electric vehicle infrastructure and EV adoption. Starting an EV business, such as a charging station network, EV dealership, or battery servicing unit, could place you ahead of the curve.

How to Start an Automotive Business in Canada?

The process to establish an automotive business in Canada is discussed below:

1. Choose the Right Business Model

The first and most important step is determining exactly what type of automotive company you want to build. Are you planning to open a car dealership, run a repair and service shop, become a spare parts retailer or wholesaler, or perhaps venture into the electric vehicle (EV) sector by setting up a showroom or EV charging station? 

Every model has a unique set of expenses, opportunities, and legal requirements. This is why carrying out in-depth market research is crucial.

2. Create a Business Plan

Once your business idea is defined, it’s time to turn it into a solid business plan. This document isn’t just for investors or banks—it’s your roadmap. It should include a market analysis that outlines current trends and your competitive landscape, an operational strategy detailing how your business will run day-to-day, and financial projections showing expected revenue, costs, and profitability.

3. Register Your Business in Canada

With a plan in place, the next step is to make your business official. You’ll have to select a suitable business structure, whether that’s a sole proprietorship, a partnership, or a corporation. Most foreign entrepreneurs opt for a corporation because it offers better legal protection, easier access to investment, and credibility. 

Note: Registration requirements vary depending on whether you’re operating at the federal or provincial level, so make sure you comply with the appropriate authorities. 

4. Open a Corporate Bank Account

After registering, one of the first operational tasks is to open a corporate bank account in Canada. This is not just a formality—it’s essential for managing your business finances.

A corporate account enables you to receive payments from customers, pay suppliers, manage payroll for your employees, and handle taxes efficiently. Most Canadian banks offer business accounts with online banking features, which make day-to-day operations smoother. 

Our experts from OnDemand International can help you set up a business and open a bank account in Canada. 

Documents Needed to Establish an Automotive Business in Canada

• Articles of Incorporation
• Business license
• Proof of business address
• Insurance documents (commercial, liability, workers’ compensation)
• Motor vehicle dealer license (if applicable)
• Environmental compliance reports
• Employee contracts
• Lease agreement or property ownership proof
• Financial documents (bank statements, funding proof)

Cost of Starting an Automotive Business in Canada

Here’s a breakdown of the expected costs to set up an automotive business in Canada:

Conclusion

Canada’s dynamic automotive industry offers immense potential for entrepreneurs, whether in traditional dealerships, repair services, or the booming EV sector. With a strong economy, skilled workforce, and favorable trade agreements, now is the perfect time to establish your automotive business in this thriving market.

From business registration and licensing to securing financing and navigating regulations, the process can be complex—but you don’t have to do it alone. OnDemand International’s experts provide end-to-end support, helping you set up, scale, and succeed in Canada’s competitive automotive landscape. Reach out to our Canadian desk today.