What Fiat Chrysler and PSA Peugeot Citroën Merger Will Mean for U.S. Car Buyers

What Fiat Chrysler and PSA Peugeot Citroën Merger Will Mean for U.S. Car Buyers

psa group
  • fiat chrysler automobiles (fca) and france's psa group agreed to a 50/50 merger this week.
  • fca's portfolio includes chrysler, dodge, jeep, ram, fiat, alfa romeo, and maserati, and psa group is the parent company of french brands peugeot, citroën, and ds as well as former gm units opel and vauxhall.
  • this merger is not so much about finding new markets for products as letting fca share in the more sophisticated technology psa controls, including electrified drivetrains and advanced front-wheel-drive platforms.

    mergers between large auto companies may excite analysts and business journalists, but our first reaction is more selfish: what's in it for us? now that it's confirmed fiat chrysler and psa are throwing in together to create what will likely be the world's fourth-biggest automaker—building 8.7 million vehicles a year—we're more interested in the specifics of future model plans. instead, perhaps inevitably, the evaluation of a deal like this tends to be more about stockholder value, future earnings, and potential for cost-saving synergies than about the product.

    and that's a shame. between them, the two groups control a huge number of brands, several of which we care deeply about. as well as fiat and the little that remains of chrysler, fca has dodge, ram, jeep, alfa romeo, and maserati in its portfolio, plus abarth and the (dead outside italy) lancia. psa has peugeot and citroën plus the upmarket ds brand, as well as opel and vauxhall, which were acquired from gm in 2017. that's a huge portfolio with both significant overlap but also geographic anomalies—the most obvious being that apart from the buick regal, which is built in germany, no psa products are currently sold in the united states.

    peugeot is already committed to returning to the states, something that we are looking forward to, with future products already being designed to meet u.s. type approval. the merger would seem to make that process significantly easier, allowing the combined group to use fca's u.s. sales and distribution channels to act as a bridgehead. don't be surprised if the target date of 2026 for peugeot sales to start gets pulled closer, which counts as a reason to be cheerful.

    there's less obvious potential to move things in the other direction. jeep models are already sold in europe, but fca gave up on european sales of both dodge and chrysler some time ago; it’s fair to say there will be no more demand for cars like the 300c on the far side of the atlantic than there was when the plug was pulled. that ties into the core reason for fca's enthusiasm for finding a strong partner: a desperate need for technical innovation and new products, especially in europe.

    all european automakers are facing the challenge of reducing average fuel consumption and co2 emissions, with huge fines for those that exceed per-car averages. psa has already made big moves toward hitting these ultra-tough targets; fca, much less so. the merger will mean that future models from the fiat side of the family will be able to share psa's technology and electrified drivetrains, with further cost-saving synergies from what will likely be merged production. that means that smaller next-gen models from fiat, alfa, and even jeep could be switched to psa's considerably more advanced architecture, similar to the way the volkswagen group's mqb platform underpins dozens of different models.

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    what psa doesn't offer is a larger car platform. all of the group's current products are native front-drivers, and the biggest vehicle in the family is the ds7 crossback crossover (above) which—thanks to europe's tastes for compact dimensions—is just 180 inches long, shorter than a lincoln corsair. earlier this year psa was reportedly discussing a merger with jaguar land rover, and while the marriage to fca may well have killed that idea, even a technical alliance with the beleaguered british maker could offer a way of sharing costs for larger cars.

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    it is also possible that the merger will be used as an opportunity to cull models, or potentially even brands. psa ceo carlos tavares turned around the group's fortunes with aggressive cost cutting, and he may well see some low-hanging fruit in the combined company's multitude of nameplates and territories. in europe, little but habit justifies the continued existence of the vauxhall brand in the u.k.—it is used for right-hand-drive versions of opels. closer to home, we would not be surprised if fiat's slumping sales see the brand withdrawn from the u.s., or if maserati's recently announced plans for several new models get brutally pruned.

    with global pressures on traditional automakers set to continue growing, the psa/fca merger could also be the start of a wave of amalgamations. we'll be watching.

    source:caranddriver.com

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