The Speculator: How To Combine FCA with PSA

Over the years, I found some serendipity in speculating anything coming from Fiat Chrysler Automobiles – even when the Chrysler side was a part of the "merger of equals" with Daimler AG. It comes as no surprise when Allpar.com posted something about how Chrysler and Dodge might survive when FCA and Groupe PSA are fully integrated into one entity.

Granted, Allpar.com is the king of all FCA speculators. After all, it is part of their content mix that keeps them in the game for their loyal readers. But, I am definitely intrigued that they would go as far as to ride on Groupe PSA CEO Carlos Tavares' quote that he is a "brand addict" – something that may help the cause of the newly combined company.

The good news that came out recently was that FCA CEO Mike Manley was quoted by Autoblog to say that the two companies are hashing out which platforms will underpin their vehicles across the combined company. That is a good sign, at least.

Yet, I have some ideas on where this would all lead by 2026 when we could see everything integrated into one company and actually showing results from the merger. After all, this merger will take some time to be fully realized globally and here in North America.

Given everything that has been said, written about, and considered, it's time to fire up the V&R Speculator!

Where I will start is how I envision the combined company based on the statements made by Tavares and Manley. The two areas I want to focus on are manufacturing and product – both really go hand-in-hand, if you think about it.

Photo courtesy of Peugeot/PSA Groupe

The main statement made by both FCA and Groupe PSA is how they would retain all manufacturing worldwide, as well as the rank-in-file at each plant. The combined company will have facilities in Europe stretching from Spain to Poland, touching upon all of the major economic powers within the European Union.

One of the fears I brought up in an earlier article was that the combined company could end up rationalizing its manufacturing base in Europe. Could they still operate plants in Germany (for Opel and Vauxhall), Italy (for Fiat, Lancia, Alfa Romeo, and Maserati), and France (for Peugeot, Citroen, and DS), while they consolidate vehicles on a few PSA platforms? What if a certain brand ends up being caught on the wrong end of sales and vehicle development?

The common platform issue could be given some leverage depending on the brand and its primary market. It takes some effort to create this delicate balance to ensure that vehicles on these common platforms have some standing in their best markets across Europe.

There is a solution, however. Taking a page from the Volkswagen Group's playbook, you can position certain brands at certain price-point levels to attract a wider range of customers. If Peugeot is seen as a mid-priced, slightly upmarket brand, then you position Vauxhall/Opel and Fiat as lower priced brands offering high content and embedded value. Then, you create niches among these clusters of brands per price-point. Fiat can produce some retro-styled, fun products that can be sold across the continent, while Vauxhall and Opel will have affordable mainstream vehicles that would augment Fiat quite well.

Photo courtesy of Opel/PSA Groupe

Would the combined company be able to keep Vauxhall? The answer is simple: Brexit. Vauxhall as a UK-only brand would be a smart thing to continue. You could have a UK dealer network that combines Vauxhall (mainstream, affordable, value-laden vehicles) and Fiat (affordable, fun, cheeky vehicles).

The next level up would be Peugeot, Citroen, DS, Lancia, and Jeep. Why move Jeep upmarket in Europe? Because it is a desirable brand anywhere – which is why I always see them as the big prize in any merger or acquisition they have been involved with. Across the continent, I could see Jeep sold at Peugeot dealers – both have a continental identity that fits quite well for customers at their price points.

Should DS and Lancia continue on within the combined company? Only if they maintain a regional basis. For example, Lancia is sold only in Italy. They could be combined with Citroen in that market, but interchangeable with DS in a few other continental markets. To combine DS and Lancia into a singular development team would not work. That would be on the basis of design rather than engineering.

Without getting into Alfa Romeo and Maserati, the strategy laid out above is perhaps the best way to maintain the combined production capacity that Tavares has promised at the onset of the merger.

Photo by Randy Stern

With the European market solidified, the next region you have to tackle is North America. This is going to be the second-most critical market for FCA-PSA to get under control. The problem is with Chrysler, Dodge, and Fiat. Chrysler is struggling with its own identity, while Fiat has struggled in the USA – period.

First of all, Dodge's problem is simple to fix: concentrate on what defines their brand. Translation: put the Charger, Challenger, and Durango on the new rear-drive platform being developed at Alfa Romeo. Get rid of any other models that wear this brand.

The Chrysler brand needs to be retained due to its historical importance to North America, as well as in the structure of the company. The minivans should be the volume seller, but it should be augmented with crossovers. Enter Peugeot. Both brands align well with their intended customers, so it makes sense to add crossovers to the lineup. Plus, a replacement for the 300 in an upmarket sedan that offers a new take on the old Newport/New Yorker/300 lineup of some 50 years ago. It may be a single model with three distinct flavors. Would it a version of the Peugeot 508? Or, a new car built on that same rear-drive platform as the upcoming Charger/Challenger/Durango? Either one would work.

Photo by Randy Stern

The primary brand focus for North America – and the rest of the world – is Jeep. If you think about it, it would be the only brand available in every market this combined company does business in. It will also be positioned as the global source for all capable SUVs. One thing I do see happening is a move from Fiat-based platforms to PSA-based platforms and drivelines for the smaller SUVs – smaller than the Grand Cherokee, of course! That way, you can produce more Jeeps in Europe at any given plant you have these platforms produced at.

Does this mean the end of Fiat in North America? Actually, no. You can integrate the brand at mainline North American dealerships while introducing affordable, value-added, fun-looking products that will actually fit American tastes. The key would be to have this product line regionally-produced – moving the 500X to the same plant producing the Compass in Mexico. Would this mean the return of a new generation Cinquecento? Probably not. Maybe a small sedan or hatchback positioned to take on any future affordable vehicles from, possibly, China.

In terms of commercial vehicles, the combined company has a total of six brands to manage. Since the SEVEL plant in Italy makes vans for five of those brands, some rationalization would have to take place. You could go with a national brand strategy: Fiat for Italy, Peugeot and Citroen for France, Opel for Germany, and Vauxhall for the UK. Using this strategy would combine all of the vehicle products within the commercial portfolio under one brand in their designated country, instead of selling the same exact vehicle across all brands in those markets. That way, you still maintain production capacity for those vehicles without having to scramble your product line all over the continent.

Photo by Randy Stern

This also means retaining the Ram brand for the Americas – except in places where Fiat is more prevalent. I would also leverage the Fiat brand for commercial vehicles in other parts of the globe as they are seen as a leader in this segment across the board.

If there is an opportunity for a singularly developed new product to be sold worldwide – it would be a mid-size pickup truck. Rumors have it that we would see this vehicle appear in Ram form pretty soon. It would make sense that if they introduce this product with the aim at going after the Toyota Hi-Lux/Tacoma, Nissan Navara, Ford Ranger, Mitsubishi Triton, GM's Colorado/Canyon/S-10, Isuzu D-Max, and so on, then it should be universally positioned with versions that match their national brand. Or, maybe the combined company could leverage the Ram brand for this vehicle on a global scale.

Imagine a Ram going toe-to-toe with a Toyota or a Holden in Australia's toughest terrain. That could be a win for the FCA-PSA combine.

Photo by Randy Stern

Lastly, this combined company must position Alfa Romeo and Maserati at the top of the combined company's global lineup. These are two Italian brands with rich histories and reputations that need to be upheld and cultivated further. Everywhere FCA-PSA has a presence they should be there. And, the products should be given a higher standard of quality that is peerless in their price points. You also combine their showrooms worldwide. One cannot succeed without the other within the structure of this combined company.

The one overarching piece of the puzzle is centered on electrification and autonomous drive technology. One of the areas that this combined company needs to concentrate on is to create a strategy towards meeting the future by leveraging their technology base. This will mean more EVs and plug-in vehicles available across most, if not all, brands worldwide.

It also takes an agreement to create singular approaches to these future vehicle technologies. For example, the Peugeot e-208 has an EV driveline that could be ported in all small vehicles. Jeep, Chrysler, and Peugeot have plug-in hybrid systems that could be consolidated into a singular architecture that is available across larger platforms. Let's not forget about Ram and Jeep's eTorque mild hybrid system, which could see use in the company's commercial vehicles.

Photo courtesy of DS/Citroen/PSA Groupe

All of this could happen if Tavares, Manley, and the combined corporate brass are committed to the statements they made several months ago. If this goal is to maintain production capacity in Europe and elsewhere, perhaps we could see the transition to common platforms across all of the combined brands. The key to this transition is to avoid disruption of product development. That could affect the future of the brand and product portfolio, if not jobs at assembly plants worldwide.

All I know is that this could all happen and everyone would benefit from the results. Let's hope so.

Cover Photo by Randy Stern

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