PARIS/MILAN/LONDON - When Carlos Tavares takes the wheel of a combined PSA and Fiat Chrysler this year he will quickly need to revive the carmaker’s fortunes in China, rationalise a sprawling global empire and address massive overcapacity.
Once up and running, Stellantis will have 14 car brands under one roof, from FCA’s Fiat, Jeep, Dodge, Ram and Maserati cars to PSA’s Peugeot, Citroen, Opel and DS. Both PSA and FCA operate at just 8% of their capacity in the Asia-Pacific region, according to consultancy LMC. Most of that capacity is in China, a market of 21 million cars a year, and analysts said the merger is the best chance for a turnaround.
While Stellantis has pledged not to close any factories, its network could build as many as 7 million more vehicles than it currently sells, according to LMC. “PSA and FCA will profess that Stellantis will be global and not French or Italian but their governments will remind them they have a nationality,” said Houchois at Jefferies.Stellantis will have rivers of cash to fund restructuring and the development of electric vehicles thanks to FCA sales of high-margin Jeep sports-utility vehicles and Ram pick-up trucks to U.S. consumers.