Peugeot vows to preserve brands in FCA deal
For those worried about the future of brands including Dodge, Chrysler and Fiat when they become part of the world’s fourth-largest automaker, Carlos Tavares, the man slated to be that entity’s first CEO, might have given them the best news of all Wednesday.
Tavares, who leads Peugeot maker PSA Groupe as board chair and CEO, is all about automotive brands. It’s a theme he stressed during a call following the signing of a binding agreement on the merger of France’s PSA Groupe and the Italian-American Fiat Chrysler Automobiles.
“The biggest intangible asset of a car company is the brand portfolio,” Tavares said, echoing a sentiment expressed by Sergio Marchionne, the late FCA CEO. “The brands carry passion, the brands carry the history and the brands carry the emotions. This is the reason why we consider they will stay in their countries of origin – Italian brands will stay in Italy, French brands will stay in France, American brands will stay in the U.S., and German brands will stay in Germany.”
That should soothe a few concerns from those who wondered if the merger might lead to the death of some brands that haven’t had the visibility, or profits, of say, Ram or Jeep.
The coming merger of PSA Groupe and FCA will create a global powerhouse, competing with the likes of Volkswagen, Nissan-Renault and Toyota, producing annual vehicle sales of 8.7 million, revenues of $189.54 billion (170 billion euro), $12.26 billion (11 billion euro) in recurring operating profit and an operating profit margin of more than 6.6% based on 2018 results, according to the companies.
It not only will send ripples across the world’s automotive landscape, but it will connect what had at one time been the weakest of the Detroit Three into a combination that eclipses General Motors and Ford.
The merger potentially opens new markets for Jeep SUVs and Ram trucks and will allow the automaker to save on development of expensive electrification and self-driving technologies.
FCA CEO Mike Manley, who is slated to have a “senior executive” position in the new company, touted the merger, which will create “the world’s third largest (automaker) by revenue and the fourth largest by volume” in an email to employees:
“By uniting our two groups, we will be poised to compete and win in an industry that is undergoing transformational change.“
The agreement is a key next step in a proposal first announced in October, which is likely to take 12-15 months to complete. The result will be a cornucopia of brands – FCA’s Jeep, Ram, Chrysler, Dodge, Fiat, Alfa Romeo, Maserati and Lancia with PSA’s Peugeot, Citroen, DS Automobiles, Opel and Vauxhall.
Carla Bailo, president and CEO of the Center for Automotive Research in Ann Arbor, Michigan, sees the combination as positive.
“As Sergio said for a long time, they needed a partner,” Bailo said. “This partner is probably one of the better ones they could have chosen.”