STELLANTIS: BIRTH OF A GIANT
THE UNION OF GROUPE PSA AND FIAT CHRYSLER HAS CREATED AN AUTOMOTIVE COLOSSUS. WHAT DOES IT MEAN FOR THE MARQUES YOU CARE ABOUT?
How one the world’s sharpest auto executives merged PSA and FCA to create a car-manufacturing colossus
THIS IS THE biggest shake-up in the global car industry since Dieselgate. Groupe PSA and Fiat Chrysler Automobiles – two international car-making giants in their own right – have joined forces to create Stellantis. Operating in 130 different world markets and employing around 400,000 people, the new super-group is headed up by industry wizard Carlos Tavares.
All of this can be seen as good news for the 14 marques (plus Fiat Commercial, Mopar and two mobility brands) it now controls. Brands like Alfa Romeo, Peugeot, Fiat and Jeep are steeped in history and rightly proud of their long and glorious back catalogues. And some, even before Stellantis was formed, have been undergoing resurgences.
“This is a big move,” says Felipe Munoz, senior analyst at industry watchers JATO Dynamics, pointing out that PSA and FCA also merge their know-how in crucial areas such as autonomous driving and electrification tech – two enormous and expensive contemporary car-making headaches. “This is also a response to the challenges the industry faces, and how desperate the traditional manufacturers are to finally evolve.”
Stellantis, then, is shot through with talent, giving each of its many brands access to vast pools of resources, people and expertise.
“This merger is not a defensive move,” Stellantis CEO Tavares told the media on day one of the new entity’s existence. “The purpose is not to be big; it is to be great at what we do.”
A PRO IN THE DRIVER’S SEAT
“Stellantis has the foundation to achieve growth,” says Munoz. “One reason is FCA: being together for 10 years is proof they can work together, save money and grow. But the second reason is Carlos Tavares.”
One of the shrewdest people in the industry, the Stellantis CEO is no stranger to success; he transformed Groupe PSA into a key player in Europe and resurrected Opel/Vauxhall’s prospects almost overnight. “When we took over Opel/Vauxhall from GM, we turned the company around in 18 months,” Tavares says. “It’s not perfect by far, but it has moved very swiftly in the right direction.”
At Stellantis, flanked by Mike Manley (former head of FCA, now head of the Americas at Stellantis) and working closely with chairman John Elkann (also chairman of Ferrari), Tavares has a team by his side to realise his vision.
“We want to gain scale, and use that scale to develop innovation – use it as a lever to be more disruptive and use it to do things that some other companies cannot do. There will be an offensive move to make sure we start this new company with a new mindset, with open eyes, and ensure it’s going to have a different sense of competition.”
What about the brands that so many enthusiasts care about? Will any be killed off? “We want to keep the brands. They represent a strong asset of the company, and there is no reason why we would not leverage those,” Tavares says.
In uncertain economic times he sees Stellantis as a shield against job losses, pointing out that streamlining the group’s business strategy – not cutting jobs or closing factories – is where cost savings can be made. “The reality is that what would have been dramatic for jobs would have been a situation where [Groupe PSA and FCA] would not have been able to merge.”
THE RIGHT PEOPLE IN THE RIGHT PLACE
Want evidence? Take the passionate and loquacious Jean-Philippe Imparato, the man behind the great revitalisation of Peugeot in recent years. He is now the boss of Alfa Romeo. Quite a move, and one with many reasons to be confident. “Alfa needs a different way of approaching the market, and Imparato knows how to do it,” Munoz says. “He’s the right guy for this job.”
With Imparato at Alfa, Linda Jackson takes over at Peugeot after successfully refocusing Citroen on comfort. “Peugeot definitely needs new oxygen after years of SUV launches,” Munoz says. “It’s a different brand to Citroen. That’s actually thanks to Linda, so she must change her approach.”
Peugeot rebranded at the end of February, with a more premium focus. “We’re moving upmarket,” Jackson explains. “We’ve already spent a lot of time on the vehicles, so this rebrand is the second part of the journey.” The next step is to forge Peugeot Sport as a real performance arm and make electric and hybrid sports cars attractive.
Bullish Olivier Francois remains at Fiat as the brand gets
“Stellantis has the foundation to achieve growth because it has Carlos Tavares”
FELIPE MUNOZ, SENIOR ANALYST AT JATO DYNAMICS
Conglomerates can be bloated and slow-moving, and any mistakes they make can be magnified by their scale
to grips with electrification courtesy of the brilliant new 500. But Fiat has problems that Francois and the wider Stellantis group will need to fix; bar the 500, for example, the rest of the range is entirely inconsequential at present.
Munoz is sceptical about the Italian brand: “Fiat needs a big change in order to regain its visibility outside Italy, and finally find its position within the market. I think it should continue to be positioned as the semi-premium citycar brand of the group, with focus on the A segment with the 500 derivatives, and leave the B and C segments to its partners. Fiat abandoned the B segment in 2018 and very few consumers miss it.”
Tavares, meanwhile, certainly seems keen to apply the Opel/Vauxhall strategy to make Fiat a bigger success: “If we are able to do what we did with the Corsa with Fiat models, I believe we can make those business plans fly.”
Then there’s Jeep, headed up by Christian Meunier.
The biggest-selling brand of all the Stellantis marques in both 2019 and 2020, Jeep is riding the SUV wave using its long and distinguished 4x4 heritage. More is to come: an electric Wrangler, a roll-out of plug-in models, a new Grand Cherokee targeting premium SUV buyers, and the return of the ultra-luxe Grand Wagoneer name – all due within the next two years.
While Davide Grasso remains boss of Maserati, chairman Harald Wester is Stellantis’s head of engineering, the best position from which to sprinkle some proper handling magic on even the most mainstream new models in the new group’s future.
The bigger question is: will iconic Lancia survive? It currently sells only one model, the Ypsilon, a renosed
Fiat 500, in Italy. “It isn’t clear whether [Lancia] is worth keeping,” Munoz says. “It would need more models, but does that kind of investment make sense when Stellantis already has Alfa Romeo and DS?”
STRENGTH IN NUMBERS
“There’s a massive benefit to having a huge group at your back that can deliver the right technology,” Citroen’s new boss, Vincent Cobee, tells us. That’s especially true in an era of transition to zero-emission propulsion. The VW Group, for example, is starting to see the return on its massive investment in the MEB platform and will soon deploy Premium Platform Electric, the equivalent for larger and sportier cars.
For Stellantis, Fiat and Peugeot’s head-start in EVs and plug-ins makes for a handy resource pool. From a manufacturing perspective, the group’s shared resources can cover for some of its inefficient factories in the short term, giving Tavares time to whip them into shape.
“The most difficult part of a merger is the cultural and managerial sides,” Munoz says. “In the case of Stellantis, the French and Italians are not very different at the end, so I don’t foresee problems in the Daimler-Chrysler partnership. The consumer benefits from better cars, probably at more competitive prices.”
Even the former Groupe PSA, with Tavares at the helm, was no stranger to using shared platforms. “We reduced costs because of economies of scale,” he said in 2019,
“but a bigger company is only a better and more efficient company if you can manage your business better. It’s all about the execution.”
And while the new super-group has big dreams of cooperation and synergising, there seems little appetite to start introducing brands into new markets or regions. Tavares has effectively put on ice the idea of introducing Peugeot to the North American market, for example. Munoz reckons that is the right decision: “I don’t think these are the times for global expansion. They need to focus on strengthening the brands where they already have a good presence. It makes no sense to bring the Dodge name back to Europe, for example, when they can’t sell enough Jeeps in China.”
THE MARQUES CAN RETAIN THEIR IDENTITIES
Strategy, in terms of Stellantis using the current powertrains and platforms available, might be fragmented in the short term. But as the new group gets to work developing next-generation replacement hardware, those in charge of its key brands are confident there will be plenty of room for differentiation.
“Every brand in Stellantis has a certain amount of private territory when it comes to tech advances or customer benefits,” says Citroen boss Cobee. “Progressive Hydraulic Cushions is one of those for Citroen, like the dual-density material we use for seats. These are our private jewels that are fenced off from other brands. DS, Peugeot, Opel and so on have their own territories. Plus, we all get brand-specific vehicle tuning which gives those detail results.”
Each brand will be grouped into common sectors. Alfa Romeo, DS and Lancia, for example, have been pooled together in a premium segment for Europe. DS boss Beatrice Foucher is using that to the brand’s advantage, within the group: “We will work with all of the brands in the [Stellantis] group on platforms and so forth, but we will also create some specific modules for premium brands. I think that having a premium pool will help us and will be to the benefit of all of us, to help us develop more premium technology. Being three is better than being the only one.”
The same logic can be applied throughout the group. Of course, conglomerates can be bloated and slow-moving, and any mistakes they make can be magnified by their scale, but pooling resources makes more sense than ever as the industry races towards electrification. And the way Tavares turned Vauxhall/Opel around suggests Stellantis has the right man at the controls.