The drop in the value of the Canadian dollar has forced Fiat Chrysler Automobiles NV to raise prices in Canada, costing it sales and market share, chief executive officer Sergio Marchionne says.
Mr. Marchionne made his comments as the auto maker reported record third-quarter financial results and raised its guidance for full-year profit.
But Canada has been a drain, as part of a shortfall in profit margins in North America, which is a critical market for Fiat Chrysler.
"The more problematic area for us is Canada because with the devaluation of the Canadian dollar, a lot of U.S.-based products have become unnaturally expensive," Mr. Marchionne said on Tuesday during the company's third-quarter financial results webcast. "I think every attempt that we have made at maintaining margins in the region has come at a cost in terms of share."
Prices of many goods and services in Canada have risen as auto makers, retailers and other companies have tried to compensate for the drop in the value of the dollar to about 75 cents (U.S.) from 90.5 cents at the end of 2014.
Fiat Chrysler Canada vehicle sales fell 4 per cent in the first nine months of 2016 from year-earlier levels, but plunged 18 per cent last month. Chief financial officer Richard Palmer said that was caused in part by price increases the auto maker has been putting in place for the past 18 months in order to maintain profit margins.
Market share stood at 14.5 per cent as of Sept. 30, compared with 15.6 per cent a year earlier.
"We were the market leader at least up to the first half of this year, a position that we have ceded to another Detroit competitor," Mr. Marchionne said.
Ford Motor Co. of Canada Ltd., whose sales rose 10 per cent in the first nine months of the year, has grabbed sales leadership.
Fiat Chrysler Canada spokeswoman LouAnn Gosselin would not say how much prices have risen or on what models, noting that prices are adjusted regularly.
About 22 per cent of the vehicles Fiat Chrysler sold in Canada through September were built at its two Canadian assembly plants, but the drop in the currency still has an impact because many of the components that go into the vehicles are imported from the United States. The vehicles built in Canada include the company's No. 2 seller, the Dodge Caravan minivan, which is made at a factory in Windsor, Ont.
Ram pickup trucks, Fiat Chrysler's best-selling vehicle in Canada, are built at plants in Mexico and Michigan.
Fiat Chrysler is the second-largest producer of vehicles in Canada. The Canadian plants of Toyota Motor Corp., which is the biggest auto maker in Canada, cranked out 45 per cent of the vehicles sold by its Canadian sales arm, Toyota Canada Inc.
Profit margins are a priority for Fiat Chrysler, Mr. Marchionne said.
"We have made it an absolute case here inside of this house to make sure that we effectively shore up the margin shortfall in NAFTA," he said. "That continues to be single largest shortcoming that this group has against the competitor class and it needs to be cured."
That's also the case in Canada, he said, where the auto maker is "not going to chase volume just for the sake of getting numbers into the fold."
There is a positive side to the drop in the value of the Canadian dollar, he noted.
The devaluation of the currency and the new agreement with Unifor that covers workers at Fiat Chrysler's Canadian manufacturing operations will keep the two Canadian assembly plants competitive, he said.
The new agreement "buys us peace on the farm for the next four years, which are pretty important years," he said. "The cost impact is manageable."
Fiat Chrysler reported final profit of €606-million ($881-million), a turnaround from a loss of €387-million a year earlier.