BLOG: FCA-PSA merger and what does it mean for FCA

Both FCA and PSA are agreed on major merger terms and they only need to negotiate some details which should be just a little more than a formality.

Now it’s the question what it brings to FCA. First of all combined business should save €3.7 billion per year. That’s a lot of money and 80% of that should come in just 3 years without plant closing and without platform sharing. Combined company will have such high volumes that they will buy parts at lower price.

Platform sharing is not expected in the near future. Plans laid out for the next 2 or 3 years should stay in tact.

What’s FCA gaining directly from PSA? If you ask me not much in terms of platforms. PSA doesn’t have a dedicated BEV platform which FCA launch with an all new electric Fiat 500. PSA doesn’t have modern platform which FCA have with the Giorgio, used on the Alfa Romeo Giulia and Stelvio. PSA even doesn’t have platform with mechanical AWD system which FCA have in Small Wide and which is used on many products and which will be updated for the upcoming Alfa Tonale. PSA even doesn’t have 2 litre petrol engine’s not to mention 6 cylinder ones.

So here I can see a lot of technology which can be transferred from FCA to PSA.

So what will FCA gain? 

Much better sales and service presence in French and German markets. That should help Fiat but especially Alfa Romeo brand.

Fiat could launch a new Punto or a 600 or even a proper B segment crossover while pushing next generation 500X slightly higher to take on VW T-Roc. So Fiat brand could benefit from using PSA’s CMP (Common Modular Platform).

In any case FWD models from a new group will take advantage of a larger scale in Europe with higher utilization of the Italian factories. More savings could be achieved through closing German(Opel factories). German labour is the most expansive while it’s easier to lay off workers in Germany than in France or Italy. It’s only a question will Germany allow this outcome.

I don’t see much space for improvement of a North American FCA business. North American factories are highly utilized and they like big vehicles and big engines. It’ also a heavily profitable region for FCA. So I’m expecting that they will keep business as usual with addition of more BOF based and Giorgio based models.

They may opt for importing some FWD cars from Europe but as I’ve mentioned earlier Peugeot doesn’t have petrol engine bigger than 1.6 litres and doesn’t have AWD systems and both are crucial selling points in North America.

In Latin American namely Brazil which is FCA’s stronghold they will keep business as usual.

Alfa Romeo and Maserati plans should stay in tact with probable addition of more models. PSA doesn’t have such prestigious car brands so we should not worry about Alfa’s and especially about Maserati’s fate.

The major goal of this merger will be achieved with common development of electrified and electric cars together with autonomous technology. Merger will save a lot of money to reach these goals.

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