Stellantis: the sum of PSA and FCA and what it brings for fleets
The new Stellantis car group officially became a company on 16 January 2021 but it faces formidable challenges: it has to be profitable, play a global role and roll out a comprehensive electrification plan. Today it comprises fourteen brands, but the existence of some of them is under threat, as is part of the group's production facilities. For major fleets, Stellantis becomes a global supplier to be reckoned with.
Peugeot, Citroën, DS, Opel, Vauxhall together with Alfa Romeo, Fiat, Lancia, Maserati, Dodge, Jeep, Chrysler, RAM and Abarth form a brand portfolio that covers many market segments – arguably even more so than the brands of VW Group, the Renault-Nissan alliance, Toyota Motor Corporation and the Hyundai-Kia group.
The most successful brands of Stellantis are Jeep and Peugeot, which will be further developed as spearheads of the Stellantis strategy. Peugeot is likely to benefit from the consolidation as it gains access to the North-American market much more easily than without FCA’s existing retail network.
Despite currently being the third brand by volume, Fiat is having a much harder time. It is not represented in China and virtually non-existent in the US and has an outdated and limited product offer. Of all the Stellantis brands, it is undoubtedly the one that will benefit most from PSA Group's modern technology and new platforms. However, Stellantis will have to figure out a way to avoid internal competition for the other entry-level brands of the group, such as Citroën and perhaps even Opel.
Citroën, meanwhile, has been repositioned and has a young range. It is successful mainly in Europe and would not be threatened in its existence. Opel would not be in danger either, now that it has switched entirely to PSA platforms, except for the Astra and the Insignia.
Dodge, which is mainly sold in the US and has disappeared from showrooms everywhere in Europe, could possibly pose a problem due to the fact that Americans prefer SUVs and pick-ups, but also due to the high average emissions of the brand's models, which are also increasingly being curbed in the US. Its continued existence is uncertain.
The emissions problem obviously exists for RAM's large pick-ups too, which are, however, very successful in the US and provide healthy margins. Chrysler is in need of rejuvenation and currently has just three models in its range. Its future is not guaranteed – and neither is Lancia’s, the once premium European brand which has been reduced by Marchionne to an Italy-only make with a single nameplate: the terribly outdated city car Ypsilon.
The question is also whether DS Automobiles will be able to be more than a niche brand. It was spun off from Citroën in 2014 and wants to be a paragon of French design and luxury, like Champagne and fashion, which should have a big market worldwide and certainly in China. With the DS 7 Crossback, the DS 3 Crossback, the DS 9 and the future compact DS 4, the brand actually has its own range, but the question is if and how both DS and Alfa Romeo can find a place in the Stellantis universe.
Alfa Romeo is indeed an interesting case. The Giulia and the Stelvio had the task of bringing the glorious Italian brand in line with the German premium brands but failed to do so. The question is whether the Tonale, an all-electric compact SUV that the brand will introduce early next year, can make amends.
Although Maserati is at the bottom of the list in terms of volume, its survival as the only true luxury brand in the manufacturer's portfolio is not in danger. However, it is very likely that the Italians will have to cooperate more with the other brands of the group, sharing platforms, powertrains, safety tech and infotainment systems.
The challenges and opportunities
Regardless of the future of the individual brands, Stellantis' first CEO Carlos Tavares, who also led PSA back to success, will have a lot of work to do to achieve his goal. The group faces huge investments to further electrify the ranges of especially the FCA brands and needs to boost sales volumes in China.
Finally, there is overcapacity to be dealt with. It is said that Stellantis could close plants worldwide with a total production capacity equivalent to Ford's entire annual sales volume, and with the remaining production sites still sell more than it does today. It seems unlikely, therefore, that no plants will be divested, even though the group has not yet closed any plants.
Stellantis does however make terribly good sense from a commercial perspective. It becomes a far more attractive supplier for major fleets as their portfolio covers most every market segment and in the medium term PSA will gain access to markets until now only exploited by FCA and vice versa.
Corporates that have frame agreements or fleet conventions with PSA or FCA are likely to be offered a global Stellantis agreement. That could mean higher aggregated volumes and therefore increased discounts. If anything, Stellantis will be a stronger fleet partner than FCA and PSA individually.
Authored by Stijn Blanckaert & Dieter Quartier
Picture copyright: FCA, 2021