It’s in for a Rough Ride.
Fiat Chrysler Canada sales, after a record first half, plunged 20% in August year-over-year. Not exactly what we wanted to hear from the company that just received C$85.8 million in funding from the province of Ontario to help offset the C$2.6 billion retooling costs at the Windsor Assembly Plant to accommodate the Chrysler Pacifica minivan.
‘It’s about time the government stepped in and provided some support,’explained Tony Faria, the co-director for the Center of Automotive and Vehicle Research at the University of Windsor. ‘I hope it’s only the first [step].’ Because corporate welfare programs are never enough.
Not everyone was getting wiped out: Ford car and light truck sales jumped 9.0%. But GM sales dropped 8.5%. Total sales for all automakers fell 2%.
In the US, the largest export market for Canadian auto assembly plants and component makers, it was similar, only worse: Vehicle sales fell 4.1% in August, year-over-year, with GM down 5.2%, Ford down 8.8%, and Fiat Chrysler down 2.4%
From the manufacturer’s point of view, demand weakness in the US has been apparent for months: In the second quarter, exports of Canadian-made cars and light trucks plunged 6.6%, part of Canada’s worst export plunge since 2009.
Will these converging headwinds lead to a repeat of 2009? At the time, the Canadian divisions of Chrysler and General Motors, after having been subsidized by provincial and federal government for years, got a bailout to the tune of C$13.7 billion.
This post was published at Wolf Street on September 4, 2016.