MILAN – While running Nissan’s operations in North America from 2009 to 2011, Carlos Tavares had a reputation for keeping a close eye on low-cost costs for vehicles or enterprises that made no money.
Experts say that means Tavares, who is currently head of PSA Group, is likely to follow that plan when it comes to becoming a director of unified PSA and Fiat Chrysler Automobiles. The Chrysler brand may not get as well-performing as the ax and slow-moving cars, SUVs or trucks that can’t.
The companies are already talking about securing automotive platforms – the foundations and powertrains – to save billions in engineering and manufacturing costs. That could mean job losses in Italy, Germany and Michigan as Peugeot ‘s PSA technology is integrated into North American and Italian vehicles.
“You can’t be cost-effective if you keep the full scale of both companies,” said Karl Brauer, action analyst for the automated website iSeeCars.com. “We’ve seen this show before, and we’re going to see it again where they will be economizing on these platforms across continents, across multiple markets.”
Shareholders of the two companies are meeting Monday to vote united to become the world’s fourth-largest automaker, known as Stellantis. The agreement received EU regulatory approval just before Christmas.
Tavares, which has been trying to sell PSA vehicles in the U.S. for years, will not take full control of the merged companies until the end of January at the earliest.
It is likely to target Europe for consolidation first, as that is where Fiat vehicles become heavily involved with PSAs, said IHS Markit Auto Chief Inspector Stephanie Brinley. Europe has been losing money for FCA, and factories in Italy are operating far below capacity – a concern for the unions, as Fiat has a place as the largest private sector employer in the country .
“We are at a crossroads,” said Michele De Palma of the CGI FIOM metalworkers’ union. “Either there is a re-broadcast, or there is a slow closure of industry, especially the car industry, in Italy. ”
Italy’s luxury Maserati and Alfa Romeo sports brands have Italian hopes, but De Palma said investments are needed to bring hybrid and electric technology to fruition. Fiat’s Italian capacity is 1.5 million vehicles, but only a few hundred miles are exported each year. Most factories had sustained short-term layoffs due to lack of demand, even before the pandemic.
The merger is likely to affect white-collar workers, as Tavares is unlikely to keep engineering centers in Paris, Turin and Rodelsheim, Germany, where the acquired brand Opel it in 2017 set, according to analysts.
FCA activity in North America, led by the popular Jeep brand and Ram construction, is highly profitable and is unlikely to be abandoned for some time, Brinley said. Tavares said just three years ago that it wanted to sell PSA vehicles in the U.S. within a decade. He said any global automaker must sell in the U.S. market.
In December the companies announced that Fiat Chrysler CEO Mike Manley would run Stellantis operations in America.
Larger Jeep and Ram trucks and SUVs are unique to the US and usually do not sell well in Europe, so Brinley plans to design those with Fiat Chrysler in Auburn Hills, Michigan, north of Detroit. Eventually, some cars and some smaller SUVs will move to PSA bases, she said.
PSA has a wider range of smaller, fuel-efficient engines, and Fiat Chrysler needs those that meet the requirements of government fuel mileage and pollution worldwide. PSA Group’s goal is to offer all models with electronic powertrains by 2025, an area where Fiat Chrysler has also declined.
Analysts say the Chrysler brand could be in jeopardy in the U.S., where it only has two models, the 300-sedan sedan and the Pacifica minivan. US sales of the brand fell 19% through October.
Both companies have not yet announced any brand decisions. Fiat Chrysler, in a statement from Michigan, said the historic landmarks are one of Stellantis’ greatest strengths, including 10 from FCA, adding that there are no plans to close any plants. But PSA said in a statement from Paris that they have not announced any plans for the emblems. “We will issue a communication on this issue, as the EGA (shareholder vote) is not the closing date, or the publication of a strategic plan,” the statement said.
Brauer said U.S. buyers are unlikely to see Peugeot vehicles, however. Instead, smaller vehicles will be built on French or German foundations with bodies and interiors designed in Michigan.
As the link goes up his lips as a merger, the gain goes to PSA, which controls 6 of the 11 table seats with Tavares the connector.
Fiat Chrysler logos range from the Jeep powerhouse to Abarth’s performance pavilion and Lancia’s historic Italian brand, which currently makes just one model, the Ypsilon, aimed at female drivers. “I don’t plan to cut brands that still make volume, even if they target specific market segments, like Lancia,” said Francesco Zirpoli, director of the University’s Center for Automotive and Mobility Ca ‘Foscari in Venice. But too many Stellantis factories in Europe make similar vehicles. “These links need to be resolved,” he said.
Stellantis will also face major challenges in Asia, particularly in China, where both PSA and FCA are weak.
“The big market of the future is Asia. Asia will control the car industry, ” said Ferdinand Dudenhoeffer, of the Center for Vehicle Research in Germany. It already accounts for 45% of global sales. “They come together, all right. They look for collaboration, alright. They reduce headaches, okay. But they miss the most important point in the car industry. “
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Krisher reported from Detroit.