Analysis
4 Nov 19

FCA and PSA merger: how it will benefit you

It seems that in a few years’ time only a dozen manufacturer groups will still be standing in Autoland. Those who want to remain competitive and stay in business need to merge to maximize synergies and scale to reduce costs.

For a moment it looked as though Fiat Chrysler Automobiles would forge an alliance with Renault and Nissan, but excessive interference from the French government and Japanese doubts allegedly killed the deal. And suddenly there was PSA, which pursued a marriage with the Italo-American giant for various reasons.

Once the merger has been approved by the official authorities, FCA and PSA together will form the fourth largest manufacturer in the world. The two automotive groups expect savings of around 3.9 billion euros, whereas no plants would be closed.

What’s in it for the OEMs

FCA and PSA are no strangers to one another. They have already been working together in the LCV department: the Fiat Ducato is technically identical to the Peugeot Boxer and Citroen Jumper, whereas it’s baby brother Fiorino shares its genetics with the Citroën Nemo and Peugeot Bipper.  

Expanding the collaboration into the passenger car arena makes sense as PSA and FCA are relatively complementary, both in terms of product and geography. FCA is strong in North America, where it sells large volumes of light pick-up trucks and SUVs (Jeep, Dodge, Ram). It also has a solid footprint in Latin America, where its smaller Fiat models are quite popular.

PSA is unquestionably stronger on the Old Continent, where it heads the sales charts in the B and the C segment (hatchbacks, estate cars and crossovers). It is also a substantial player on the African market. As for China, both OEMs have been struggling to make their business profitable, so a joint offensive could turn things round.

The biggest reason for PSA to tie up with FCA is without a doubt the latter’s strength in the USA. PSA has long been dreaming of a return to the States and if it can rely on FCA’s existing network, that would make things a lot easier.

Another motivational factor for PSA was probably the know-how that FCA has already gathered in the realm of self-driving vehicles. It has been delivering thousands of Chrysler Pacifica’s to Waymo as part of an autonomous driving development partnership.  

For FCA, PSA is a good catch because it has already made considerable investments in electrification, with the all-electric Peugeot e-208, DS3 Crossback and Opel/Vauxhall Corsa-e. A new, zero-emission Fiat Punto or even Alfa Romeo Mito could be derived from these triplets.

Moreover, Alfa Romeo is in need of a successor to the Giulietta, for which the Peugeot 308 could serve as a basis. Even the Tonale, Alfa’s compact crossover, could theoretically share its underpinnings with the Peugeot 3008/Opel Grandland X/Citroen C5 Aircross/DS7 Crossback.

Some would even start dreaming about the revival of Lancia, which has been reduced to a small domestic mono-model brand.

What’s in it for fleets

A consolidation between FCA and PSA would mean international and global companies get to deal with a big, solid supplier that covers most every vehicle segment and market. That should also mean bigger volume discounts and a wider product choice for employees.

Another advantage could be the accelerated and more widespread roll-out of electrified models. It might even make sense for FCA-PSA to jointly invest in their own battery plants, like Daimler and Volkswagen have done.

The sharing of technological know-how could also lead to product improvements on both sides, not least in the connectivity department. Developing connected infotainment and services is expensive but necessary for a brand to stay in the race, especially when ownership is shifting to usership and manufacturers need to transform from car shifters to mobility providers.

PSA has long appreciated this necessity: in 2016 it created Free2Move, a platform that brings together all shapes of new mobility and makes it accessible to the community. 

Fun fact

Peugeot-Citroën and Chrysler have historic ties. In 1978, PSA bought the failing Chrysler Europe, which owned the brands Simca and Rootes. Rather than continue these labels, PSA decided to reintroduce the then prestigious Talbot badge to the acquired branch. In 1992, Talbot disappeared after an all but successful career.

 

Authored by: Dieter Quartier
Advertorial: