The cuts are likely due to the Fiat Chrysler-PSA tie nearing agreement | Instant News


MILAN (AP) – While running Nissan operations in North America from 2009 to 2011, Carlos Tavares has a reputation for keeping a close eye on expenses with little tolerance for non-monetizing vehicles or businesses.

Experts say that means Tavares, who is currently the head of the PSA Group, is likely to follow the blueprint when he becomes chairman of the combined PSA and Fiat Chrysler Automobiles. The low-performing Chrysler brand might get an ax just like the slow-selling car, SUV, or truck that lacked potential.

Companies are already talking about consolidating vehicle platforms – basic and powertrains – to save billions in engineering and production 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 save money if you keep the entire scale of the two companies,” said Karl Brauer, executive analyst for the iSeeCars.com website. “We’ve seen these shows before, and we’ll see them again where they save on this platform across continents, in multiple markets.”

Shareholders of the two companies will meet Monday to vote on a merger to form the world’s fourth-largest automaker, called Stellantis. The deal received EU regulatory approval just before Christmas.

Tavares, which has wanted to sell PSA vehicles for years in the US, will not take full control of the merged company until late January at the earliest.

He is likely to target Europe for consolidation first, because that’s where Fiat vehicles overlap widely with PSA, said IHS Chief Car Analyst Markit Stephanie Brinley. Europe has been a money loser for the FCA, and factories in Italy are operating well below capacity – a concern for unions, given Fiat’s role as the country’s biggest private sector employer.

“We are at a crossroads,” said Michele De Palma of the metal workers union FIOM CGIL. “Either there is a relaunch, or there is a slow, painful shutdown of the industry, particularly the auto industry, in Italy.”

Italy’s hope lies in the luxury of the sporty Maserati and Alfa Romeo brands, but De Palma says investment is needed to bring hybrid and electric technology even faster. The capacity of Fiat Italia reaches 1.5 million vehicles, but only a few hundred thousand are produced each year. Most of the factories were carrying out short-term layoffs due to a lack of demand, even before the pandemic.

The merger is likely to have an impact on white-collar workers too, as Tavares is unlikely to maintain technical centers in Paris, Turin and Rodelsheim, Germany, where the Opel brand he acquired in 2017 is located, according to analysts.

FCA’s North American operations, led by the popular Jeep and Ram pickup brands, are highly profitable and likely won’t be touched for a while, Brinley said. Tavares only three years ago expressed his desire to sell PSA vehicles in the US within a decade. He said every global carmaker had to sell in the US market.

In December the company announced that Fiat Chrysler CEO Mike Manley would run Stellantis’s American operations.

Larger Jeeps and Ram trucks and SUVs are unique in the US and generally don’t sell well in Europe, so Brinley expects the trucks and SUVs to be designed by Fiat Chrysler in Auburn Hills, Michigan, north of Detroit. Eventually some cars and some smaller SUVs will move to the base of the PSA, he said.

PSA has many smaller fuel-efficient engines, and Fiat Chrysler will need them to meet government fuel mileage and pollution requirements worldwide. PSA Group’s goal is to offer all its models with powered powertrains by 2025, an area where Fiat Chrysler is also lagging.

Analysts say the Chrysler brand could be under threat in the US, where it has only two models, the old 300 sedan and the Pacifica minivan. Brand sales in the US fell 19% through October.

The two companies have yet to announce a decision on branding. Fiat Chrysler, in a statement from Michigan, said one of Stellantis’ biggest strengths was its historic brands, including 10 from FCA, adding that there were no plans to close any factories. But PSA said in a statement from Paris that it had not announced plans for the brand. “We will communicate because of this, because the EGA (shareholder vote) is not a closing date, nor is it an announcement of a strategic plan,” the statement said.

Brauer said US consumers are less likely to look at Peugeot vehicles. Instead, the smaller vehicles would be built on French or German bases with bodies and interiors designed in Michigan.

While the tie is billed as a merger, the profits go to PSA, which will control 6 of the 11 board seats with Tavares as the tie-breaker.

Fiat Chrysler’s brands range from powerhouse Jeeps to performance Abarth marquee and historic Italian brand Lancia, which currently only produces one model, Ypsilon, targeting female drivers. “I don’t expect to cut into brands that are still producing volume, even if they focus on a very specific market segment, like Lancia,” said Francesco Zirpoli, director of the Center for Automotive and Mobility at Venice’s Ca ‘Foscari University. But Stellantis will have too many factories in Europe making similar vehicles. “This overlap must be resolved,” he said.

Stellantis will also face big challenges in Asia, particularly China, where PSA and FCA are weak.

“The big market for the future is Asia. Asia will dominate the car business, “said Ferdinand Dudenhoeffer, of the Center for Automotive Research in Germany. Already 45% of global sales. “They join, okay. They find synergy, okay. They reduce the number of employees, okay. But they missed the most important point in the car business. ”

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Krisher reported from Detroit.

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