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Why did FCA sales plummet in Canada?

by David Zatz on

Chrysler Canada, and then FCA Canada, have had a higher market share than their USA counterparts for many years. There were even times when Chrysler was the #1 automaker in Canada. That didn’t happen this month, with FCA Canada sales plummeting by 33%.

The extent of the drop. Every brand but Alfa Romeo and Chrysler fell. The Giulia and 4C fell, but the new Stelvio saved Alfa’s month; year to date, the Stelvio outsold all Fiats, combined. Chrysler’s numbers were saved by a 53% gain in Pacifica sales, but the actual number sold was just 484. Jeep dropped by 37%, with the Renegade having just 40 sales; Caravan sales were half of July 2017’s number.

It was not an industry-wide bloodbath; only FCA was so severely hit.

The causes. FCA did not comment for this story; but FCA Canada ended a major discount promotion just before the month started, and chances are the major issue was the drop in incentives. Canny customers may be hoping they return; whether they do or not is a question, though, in a company generally focused on profits over volume.

One trusted dealership employee told us that another issues is the VPA, or volume purchase allowance program, which gives dealers a heavy discount on cars as volume increases. Sometimes, it actually pays for dealers to buy new cars and then sell them as used (or sell them to used car lots), if it means getting rather than losing the bonus — a problem BMW and Mercedes saw a few years back, and which is not unique to FCA.

The popular Caravan, according to the same source, suffered from an inventory shortage, as both a new car and a used car. That could account for the disproportionate hit to Caravan sales — and the Caravan, last July, outsold every Jeep, Dodge, or Chrysler.

All together, these factors likely combined to slam July sales. What’s more, it’s possible that, as FCA strives more for profitability than sales bragging rights, Canadian FCA sales may reach a new, lower, and more natural “normal state.” This already happened in the United States, where sales had to fall for a time and find their balance before rising on a more natural basis. If that’s true, Canadian sales may be depressed for months until they start climbing again; and the company may even adjust the product mix rather than reflecting U.S. sales on a 1:1 basis. Keeping Fiat and Chrysler, as Canadian brands, may be hard to justify for long.

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