Sergio Marchionne Is Alarmed By FCA's Sudden Canadian Downturn, And Rightly So

by Timothy Cain

Published: October 25th, 2016

sergio marchionne is alarmed by fca s sudden canadian downturn and rightly so

With Jeep as the fastest-growing auto brand in the country and Ram pickup truck sales soaring to record levels, Fiat Chrysler Automobiles was Canada’s top-selling automobile manufacturer in calendar year 2015.

It was the first year in the company’s 90-year history that FCA (or DaimlerChrysler, or Chrysler Group, or whatever it was known as) outsold all other manufacturers.

Yet in claiming the top-selling mantle, FCA’s Canadian market share decreased marginally, falling from 15.6 percent in 2014 to 15.4 percent in the automaker’s highest-volume year to date.

Fast forward nine months and FCA boss Sergio Marchionne finds the company’s Canadian situation, “alarming,” according to Automotive News Canada. How bad is it? And how did the tide turn so quickly?

MARKET SHARE

In the third quarter of 2016, FCA Canada’s market share plunged to 12.7 percent, a deep dive from the 15.1 percent reported during the same period one year ago. Q3 volume plunged by more than 13,000 units, a 17 percent year-over-year loss.

The Canadian market is most definitely slowing. But it’s not like the industry ran into a brick wall.

Across the industry, including FCA, sales fell 2 percent in Q3. Subtract FCA from the equation and Canadian auto sales actually increased 1 percent in Q3, adding nearly 5000 sales in large part thanks to all-time record Ford F-Series sales.

VOLUME

Marchionne told ANC that, “We’re not out to chase volumes just to get numbers into the fold here,” a statement that will surely humour (yes, with a u) Canadian industry observers who’ve watched for years as FCA chased volume.

FCA produced one-quarter of its volume via fleet sales during the five-year period stretching from 2011 to 2015 and made a practice out of advertising $7,000 or more in Grand Caravan discounts.

But producing that volume — and earning a profit at the same time — is becoming more difficult for FCA because of a Canadian dollar that’s much weaker now than it was five years ago. Essentially at par with the U.S. dollar as recently as April 2013, one Canadian dollar now buys only USD $0.75.

CURRENCY

This works out well for FCA’s assembly plants that build the Dodge Charger, Dodge Challenger, Chrysler 300, Dodge Grand Caravan, and Chrysler Pacifica in Brampton and Windsor, Ontario.

Selling cars in Canada, however, is another matter.

In 2013, FCA was selling, for example, a CAD $40,000 pickup truck in 2013 that was worth roughly $40,000 U.S. dollars.

Today, that CAD $40,000 sale equals only USD $30,000.

FCA is obviously less willing to make that deal, resulting in lower incentives and higher prices that drive buyers to rival showrooms.

BLUE OVAL

Ford Canada, meanwhile, stepped on the incentive throttle pedal in September in order for the F-Series to outsell its three top-selling truck rivals combined. “We’re not concerned with how the truck is priced in the U.S.,” Ford Canada’s product manager for trucks told TTAC in late September, clearly revealing Ford Canada’s willingness to counteract currency issues with increased volume.

Back at FCA, the automaker trailed Ford Canada by a 20,372-unit margin heading into the fourth quarter. General Motors Canada unexpectedly managed to outsell FCA’s Canadian division in August and September, as well.

Canada is disproportionately important to Fiat Chrysler’s North American operations. The Canadian auto industry generates 9.6 percent of North America’s total auto sales volume. FCA produces 11.0 percent of its North American volume in Canada.

[Images: FCA, TTAC]

Timothy Cain is the founder of GoodCarBadCar.net, which obsesses over the free and frequent publication of U.S. and Canadian auto sales figures. Follow on Twitter @goodcarbadcar and on Facebook.

#AutoSales #Canada #CanadaAutoSales #Currency #CurrencyChallenges #Fca #FiatChryslerAutomobiles #September2016Sales

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2 of 14 comments

Lou_BC on Oct 25, 2016

Consumer Reports coming back to haunt FCA?

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Danio3834 on Oct 28, 2016

Much of this is due to truck allocation going to the U.S., and maxed out production not being able to fill Canadian demand. When it comes down to where to put the sale, it'll go to the more valuable dollar.

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