Editorial: With Fiat Sales Soaring In Canada, Is It Time For More European Small Cars?

What do Buick, Volvo, Infiniti, Mini, Cadillac, Lincoln, Suzuki and Scion have in common? All were outsold by Fiat in Canada last month.

Sales analyst Tim Cain uncovered the data during his monthly sales research, and data shows gradual increases this year for the 500 in the United States. In Canada, the gains are even better, with Canadians taking to the small, stylish compact car, warts and all. The upcoming 500L should be an equally strong success, and the Punto replacement due at the end of 2013 should provide a strong challenge in the highly competitive compact segment.

A few years ago, while having lunch with a VW Canada sales executive, I was told that VW would have brought the Polo to Canada long ago, but the homologation process (practically identical to the United States) made it difficult to justify. The sales were there, but the added cost of bringing it up comply with various regulations wouldn’t make it feasible. On the other hand, the Polo was sold in Australia, which had a comparable population, more expensive cars and looser regulations.

We all know Canadians love small cars, hatchbacks and European brands (though, to be fair, the best-selling vehicle is the Ford F-Series). And the country’s higher gas prices add a further incentive to purchase small, fuel-efficient cars. Although journalists and enthusiasts in both Canada and the United States have long asked for European compact cars (especially diesels) to make their way over to North America, there may finally be a business case for doing so in Canada.

With news that Mitsubishi will bring their stripped-down Mirage (meant for Thailand and other emerging markets) to Canada but not necessarily the U.S, it’s prudent to start looking around for other candidates. The new tie-up between General Motors and PSA yields the most enticing fruit. The Fiat 500’s success, in my opinion, comes from a perceived premium image versus, say, a Chevrolet Sonic or Toyota Yaris, and a comparable sticker price.

So why not something like the Citroen DS line or the Peugeot 208? The DS line, supposedly Citroen’s premium small car line, could take the fight to everything from the Hyundai Elantra to the VW Golf/Jetta. Citroen execs are even on record about bringing their cars to Canada as far back as 2006. Even SEAT was rumored to be coming in 1994, although such whisperings are now largely the stuff of legend. The 500s two-door body style and small size effectively limits it to a niche category. But the bigger, 4-door Citroens with their increased cargo and passenger room, more powerful engines and larger footprint would be able to attract a whole new type of buyer, while battling established players like the Honda Civic, Hyundai Accent and Volkswagen Golf.

The Francophone angle would play well in Quebec, which comprises a quarter of Canada’s auto market and loves compact, fuel-efficient cars (and stick shifts). In Canada as a whole, diesels are much more widely accepted than the United States, and the fuel is often a few cents cheaper than gasoline. Mercedes-Benz SUVs are widely purchased with BlueTec engines, suggesting that even in the premium segment, consumers are open to the idea of an alternative fuel that isn’t a hybrid.

There are undoubtedly a large number of issues that would prevent near-term sales of new European brands. But it may be something worth examining in the intermediate, especially with the return of Alfa Romeo – a brand that should do even better in Canada, given that it has a wider range of products than Fiat, and the requisite Italian cred. Alfa Romeo also has a distinctive advantage in that Fiat and Chrysler are already here on the ground. Having seen a small sliver of what it took just to establish Kia in Canada (my father acted as their legal representation during those years), it stands to reason that setting up Peugeot, Citroen or any other European brand from scratch would be similarly daunting.

Ironically, Renault, with the backing of Nissan may be best positioned to return here (at least on paper), having sold cars in Canada as late as the 1980’s. Nissan has a strong dealer network, and a full-range of Renault cars (a mix of Dacias and Renaults, which would suit Canada well) are already sold in Mexico. Alas, Carlos Ghosn is pretty adamant that Canada and the US won’t see these products. GM and PSA could very well come to the same conclusion, preferring to sell the Spark, Sonic and Cruze. Hopefully we’ll see a more diverse product mix in the future, even if the odds aren’t on our side.