The GREAT Debate: In An FCA-PSA Merger Who's The WINNER And Who's The LOSER?

When you bring in your RAM truck for repair, repeat after me:
"Fix it again, Tony!" or "Arrange ça encore, Tony"

The white collar and blue collar employees who will be fired. This merger at best is buying time for these two companies until the next deal. A mass consolidation of the entire industry is on the horizon threatening the loss of employment to hundreds of thousands of individuals in an effort to reduce costs and overcapacity. No one individual is safe from dismissal from top to bottom. When VW and Toyota are not big enough, strong enough to go it alone, no one is safe in the industry.

In this particular deal - the winner is clearly PSA - they get Jeep. I do not see any contribution from PSA to FCA's AMerican line-up - except that Citroen's high line DS platforms might form the basis for some of Fiat's higher line cars.

It is possible that PSA could fill the Chrysler Brand with DS and Peugeot cars - but cars are not selling here.

AS far as reliability - since FCA product is among the worst - and PSA does have better manufacturing control - that might be a plus

PSA is already a loser. It has far too much manufacturing capacity. Buying Opel wasn't smart, so acquiring Fiat, Alfa Romeo, and Maserati that also do not sell is disastrous. But, hey, the idiot socialist French government will bail them out.

PSA plus FCA's Italian operations are a nightmare. Both have extreme overcapacity in their high cost industrial operations in the EU. Government meddling will prevent any meaningful capacity reduction in those areas. PSA had a pretty efficient industrial operation before taking over Opel, with a lot of operations in lower cost ares (Portugal, Slovakia, Morocco etc)...maybe they will use "Brexit" as an excuse to shutter the UK plants and keep only Opels German plants. The big problem is the addition of Fiat's Italian factories which are reported to be working around 50% capacity.

The only hope for the enterprise is build out a full line of premium Jeep vehicles for sale globally...PSA is probably better equipped to pull that off than FCA. The concern is that the entire enterprise after swallowing GM Europe is so unwieldy and will take a ton of money to harmonize. One potential path forward would be to go all EV with their next gen harmonized platforms and keep only Jeep/Ram with internal combustion. Carlos Tavares is an exceptionally talented leader, and he is one of the few leaders who could pull off this merger. It will be interesting to watch from a business perspective how he handles this.

I would not hold out hope for a full line of premium Jeep vehicles. FCA has rolled out nice looking new product for Jeep, but they are cross overs that cannot compete with better CUVs from other manufacturers. Right now they sell due to the Jeep name and cash on the hood. They need to improve it quick or will lose brand value.

Two weak companies merging will produce one giant weak company. FCA could not find any strong company interested in a merger. PSA having recently acquired GM Europe has a Herculean task ahead trying to rationalize all the products, plants, contracts, strategy all during an upcoming slowdown. The winners will be other automakers who will be able to pick up talented people jumping off this ship.

Indeed. A company like Geely or Hyundai would only want Jeep, Ram, and Dodge. The rest is purely worthless garbage.

PSA will need to kill brands.

Chrysler and Lancia die immediately because they will probably go with Peugeot in Chrysler dealers.

They won't need DS and Alfa-Romeo. Kill DS.

They won't need Alfa Romeo and Maserati. Kill Alfa Romeo.

They won't need Fiat and Citroen. Kill Fiat.

They won't need Citroen and Opel. Kill Opel.

There will be a lot of consolidation in the EU. No other way it can work. Platforms and maybe even brands and models will be reduced too. 410,000 people and $190B in revenue spread across the world. Time will tell but there will be cuts. If not in 2020, then in 2021.

@canadianocmments consolidation/capacity reduction is needed, but problem is politics in Europe. The French government (which owns part of PSA) will only give approval if no job cuts are guaranteed in France (they scuttled the FCA/Renault deal because of this), and the Italian Government will likely make the same demands. They will probably shutter all British and German production, but this will still likely keep them at 70% utilization of factories. The wild card in this merger is Jeep...if they can create a new global lineup for Jeep, and command premium prices then they have a fighting chance...if not it will be a disaster.

Winners are the advisers and investors.
Losers are the employees and customers.

Peugeot is the biggest winner because they instantly get US distribution.

First thing Peugeot launches in US will be their "worker van" product line. It will do well and it will be cheap.

FCA gains almost as much because they get a new "sedan" platform that can underpin all of its passenger car offerings that are still based on the 15 year old Chrysler 300 platform. I for one can't wait for the Peugeot-based Maserati Quattroporte.

French taxpayers REALLY lose because they are now going to be on the hook for this pile of cr*p next time it needs restructuring.

French bureaurcrats GAIN because they can brag about "saving" a key piece of French industry.

Get out your lawn chairs and your martini shakers, we are in for a heck of a soap opera the next two years as the merger gets integrated.

Maybe that instant dealer network will work for a Mass market brand like Peugeot, but its the same subpar network that has all but destroyed Maserati and Alfa.

First of all Carlos Tavares has turned Peugeot around since he took over. Peugeot acquired Opel from GM(where it had been losing money for years) and turned it around. So clearly he has some talent. He is also known to be ruthless in cost cutting. Some theorize that he may keep a lot of the different brands but build them all on 2 or 3 platforms. In some respects he has some similar qualities to Sergio Marchionne. But unlike Marchionne he may not be the type the searches for the cheapest way to build a vehicle. Perhaps Alfa's reliability problems simply stem from cheaper wiring, cheaper switches, cheaper relay's then what say Mercedes, BMW and even Opel and Peugeot use. Who knows. Maybe FCA gets to use simply newer platforms to be shared Opel and Peugeot. Maybe Alfa's can be built at Opel factories in France or Germany rather than strike infested Italy. Peugeot gets a US dealer base from FCA to sell their SUV's and Crossovers. This is their ticket back to America. But clearly they will look at the portfolio at FCA and determine what brands are salvageable and what are not and act accordingly. The other point is they may want to keep the platforms for now for the 300, Charger and Challenger because everything has been long amortized. The only change maybe engine and hybrid technology to supplement or replace the FCA V8 and V6. Certainly they are NOT going to get rid of Jeep. However they may close some US plants. But they are going to have to deal with the UAW at one point or another. It will be interesting to see what plays out.

Alfa's problems stem from lack of prototype development and engineering.