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Paris / Rome, Jan 16 (EFE) .- Stellantis, the new global automotive group product of the merger of PSA and FCA, begins shooting this Saturday at a time of uncertain situation for the sector and with many challenges to achieve an authentic industrial and commercial integration of its components.
A brief statement announced today that the merger is now effective and that the new company will start trading on the Paris and Milan stock exchanges on Monday and on the New York stock exchanges on Tuesday.
The new company combines advantages and complementarities, but it also faces important challenges, such as the weakness of the European market or the limited presence in China, according to analysts from the sector in the three countries where the company is most established.
The Stellantis puzzle is complex, because it brings together 14 brands. In PSA, the French Peugeot and Citroën and the German Opel stand out, while FCA includes Fiat and several legendary brands (Alfa Romeo, Ferrari or Maserati) together with the American Chrysler (where in turn there are several brands, among which Jeep stands out. ).
In total, a giant that in 2019 would have been the fourth world manufacturer, with a combined production of 7.48 million vehicles.
THE ADVANTAGES OF SIZE
The main advantage of the merger is “clearly the increase in size” of the company, something “essential” for the necessary investments in electric mobility, the challenges of digitization, connectivity and autonomous driving, says Vittoria Ferraris, head of automobile in Europe of S&P Global Ratings, in Paris.
Andrea Giuricin, head of TRA Consulting (Milan) agrees on this: “electrification requires billions of euros in investments and with shared technologies economies of scale can be developed”.
“PSA is clearly ahead of FCA in the development of electric and hybrid cars”, which will help Fiat and Chrysler, highlights Maria Teresa Bianchi, professor and specialist in business economics at the University of Sapienza (Rome).
Ferraris also considers that FCA and PSA are very complementary, as the former is very strong in North America with its SUV and pick-up vehicles, and in Europe with the small Fiats, while PSA is much stronger in the B segments. and C from the market.
The complementarity extends to Latin America, where PSA has a good presence in Argentina, while FCA is well established in Brazil.
Doug Betts, president of the Automobile division of the analysis firm JD Power, and former vice president of Chrysler between 2007 and 2014, highlights “the leadership” of Stellantis, beginning with its chief executive officer, the Portuguese Carlos Tavares, with whom he previously agreed on Nissan, but also other high-level middle managers.
And executives have already passed the merger test with flying colors: PSA made an “extraordinary” integration of Opel / Vauxhall when it bought it from General Motors in 2016, according to Ferraris.
And the creation of FCA in 2014 was also a success, even more so with the precedent of the 1998 Daimler-Chrysler merger fiasco, dissolved in 2007.
One of the great advantages of mergers in the car is the development of common platforms for vehicles of different brands, which saves a lot of money.
When will Stellantis have its first joint platform? Giuricin predicts “a quick integration”, but without details. Ferraris believes that there will be no platform “before 2023 or 2024”. And Betts recalls that it is a process that takes “about three years”, although some preliminary work has already begun.
POSSIBILITY OF RESTRUCTURING
The weakness of the European market due to the pandemic and the strong concentration of Stellantis factories in Europe raises the question, as occurs in many mergers, of excess production centers and workers.
“It is too early to say, but there is no doubt that there should be a concentration in the plants with the highest yield”, predicts Giuricin.
For Bianchi, “inevitably there will have to be a reorganization”, and points both to Spain, where there are three PSA factories, and “also to Italy”, as possible affected.
The figures are in favor of a restructuring: PSA-FCA only used in 2019, the last year before the pandemic crisis, 57% of their joint production capacity worldwide, a figure that has been gradually falling from 69% 2015, according to data provided to Efe by LMC Auto, a company in the sector.
Mergers allow “a rationalization” of investments and model ranges, which improves the commercial margin and profitability, but “inevitably, this rationalization leads to closures”, points out Julien Samarcq, of Axys Consultants (Paris) .
Most of these analysts, except Bianchi, agree that they do not believe that PSA will try to sell its cars in the US by taking advantage of the Chrysler-Jeep commercial network, as the huge US market is too focused on SUVs and pick-ups. “, so it would not be profitable to enter now with cars.
China, the largest national automobile market, is Stellantis’ “greatest weak point”, Giuricin and Ferraris concur, since its components have a very small presence there compared to the world leaders, Volkswagen and Toyota.
Bianchi highlights the potential in China of legendary brands, such as Maserati or Alfa Romeo. Betts points to the Jeep one, due to the growth of SUVs in the Asian giant, but insists on the importance of achieving an ideal industrial partner, in addition to choosing models suitable for that market.
Ferraris also highlights another Stellantis advantage that often goes unnoticed: its strength in the light commercial sector, the only one that is growing in Europe, and where the Peugeot, Citroën and Fiat brands have several of the best-selling vehicles.
Rafael Cañas and Laura Serrano-Conde
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