Chrysler to be axed as FCA-PSA Group tie-up looms?

Fiat Chrysler Automobiles (FCA) and Groupe PSA are mere days away from officiating a merger that will result in the creation of the world’s fourth largest automaker, Stellantis. The new company will be helmed by Carlos Tavares (currently leading Groupe PSA), who has a reputation for axing vehicles or ventures that didn’t make money.

According to a report by the Associated Press, experts say the Portuguese businessman will likely follow the same mantra, pruning less popular vehicles that also lack in potential. Tavares may even go as far as axing the low-performing Chrysler brand, too.

In the US, Chrysler only has two models – the ageing 300 sedan (pictured above) and the Pacifica minivan. Sales have dropped 19% through October 2020. That said, the fate of the Chrysler brand is still up in the air.

Currently, FCA and Groupe PSA are already talking about consolidating vehicle platforms, a move that will save both companies billions of dollars in engineering and manufacturing costs. This streamlining process could translate to job losses in Italy, Germany and Michigan as PSA technology gets integrated into North American and Italian vehicles.

“You can’t be cost efficient if you keep the entire scale of both companies,” said car analyst Karl Brauer. “We’ve seen this show before, and we’re going to see it again where they economise these platforms across continents, across multiple markets.”

Tavares, who for years has wanted to sell PSA vehicles in the US, is expected to consolidate the new company’s European operations first, because that’s where FCA’s vehicles overlap quite extensively with PSA’s, said IHS Markit principal auto analyst Stephanie Brinley. Europe has been a money-loser for FCA, and factories in Italy are running way below capacity.

FCA’s North American operations are hugely profitable due to the popularity of the Jeep brand and Dodge Ram pick-up trucks. This means things will be left untouched for a while, but eventually some cars and smaller SUVs will move to PSA platforms, Brinley added. Beyond the two continents, Stellantis will also have an upward battle in Asia, where both FCA and PSA are weak.

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