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The Chrysler brand could be axed under Stellantis management

MILAN — While running NissanÂ’s North American operations from 2009 to 2011, Carlos Tavares had a reputation for closely watching costs with little tolerance for vehicles or ventures that didnÂ’t make money. Experts say that means Tavares, currently the head of PSA Group, is likely to follow that blueprint when he becomes leader of a merged PSA and Fiat Chrysler Automobiles. The low-performing Chrysler brand might get the axe as could slow-selling cars, SUVs or trucks that lack potential. Already the companies are talking about consolidating vehicle platforms — the underpinnings and powertrains — to save billions in engineering and manufacturing costs. That could mean job losses in Italy, Germany and Michigan as PSA Peugeot technology is integrated into North American and Italian vehicles. “You canÂ’t be cost efficient if you keep the entire scale of both companies,” said Karl Brauer, executive analyst for the iSeeCars.com auto website. “WeÂ’ve seen this show before, and weÂ’re going to see it again where they economize these platforms across continents, across multiple markets.” Shareholders of both companies are to meet Monday to vote on the merger to form the worldÂ’s fourth-largest automaker, to be called Stellantis. The deal received EU regulatory approval just before Christmas. Tavares, who for years has wanted to sell PSA vehicles in the U.S., wonÂ’t take full control of the merged companies until the end of January at the earliest. He likely will target Europe for consolidation first, because thatÂ’s where Fiat vehicles overlap extensively with PSAÂ’s, said IHS Markit Principal Auto Analyst Stephanie Brinley. Europe has been a money-loser for FCA, and factories in Italy are operating way below capacity — a concern for unions, given FiatÂ’s role as the largest private sector employer in the country. “We are at a crossroads,Â’Â’ said Michele De Palma of the FIOM CGIL metalworkersÂ’ union. “Either there is a relaunch, or there is a slow agonizing closure of industry, in particular the auto industry, in Italy.” ItalyÂ’s hopes lie with the luxury Maserati and sporty Alfa Romeo brands, but De Palma said investments are needed to bring hybrid and electric technology up to speed. FiatÂ’s Italian capacity stands at 1.5 million vehicles, but only a few hundred thousand are being produced each year. Most factories were on rolling short-term layoffs due to lack of demand, even before the pandemic.

FCA CEO Manley says alliances are still possible but aren't necessary

DETROIT — Fiat Chrysler Automobiles Chief Executive has a message for Renault SA and other would-be partners: We are happy to talk, but we can go it alone. "Strategically, we have a solid future and clear plans that are being invested in and are underway now," Mike Manley said during a session with reporters the day after the company released better than expected second-quarter results. "That isn't to say if there is a better future through an alliance or partnership or merger we wouldnÂ’t be open and interested to it." Fiat Chrysler is open to re-starting merger negotiations with French automaker Renault, Manley said, but added the French car maker is not the only potential partner to gain scale or plug gaps in Fiat Chrysler's technology or vehicle lineup. "To say are they the only opportunity, the answer to that question would be a definitive ‘No,Â’" Manley said. Fiat Chrysler in June withdrew a $35 billion merger proposal with Renault after French government officials intervened in the talks and sought to delay a decision on the deal. The Wall Street Journal reported on Friday that Renault and Nissan are trying again to reshape their alliance and resolve disagreements that helped to derail the merger talks with Fiat Chrysler. Fiat Chrysler has a commercial vehicle partnership with French rival Peugeot SA, and the two companies discussed a broader combination before Fiat Chrysler made its offer to Renault, people familiar with the situation have said. Manley said automakers are not the only potential partners. "There are cooperations that can help in specific technologies. There are cooperations as we think about the consumer-car interface," he said. "You could see collaborations that never would be there in the past." Fiat Chrysler's North American business is strong thanks to Ram trucks and Jeep SUVs, but in other markets the automaker faces continued challenges. The company is overhauling its mass-market business in Europe, which is anchored by the Fiat brand. Fiat Chrysler's Europe, Middle East and Africa operations were marginally profitable in the second quarter and achieved 1.8% profit margin in 2018. Manley has set a goal of 3% operating margins, well short of the 10% margins the company forecast for North America.

Chrysler IPO to be filed as early as this week

An initial public offering for the Chrysler Group could happen this week, following Sergio Marchionne's comments to Financial Times in London, according to a report from The Detroit News. Fiat, which owns 58.5 percent of Chrysler, has been in a battle with the UAW retiree healthcare trust over its minority stake in the company. While the automotive union recognizes its role as a temporary shareholder, the two couldn't come to an agreement on how the shares should be priced.
As Marchionne explained to FT, a Chrysler IPO allows the market, rather than the two competing sides, to determine the value of the shares. The public offering is a risky move, which could potentially hang one side out to dry - if the shares go high, it's bad news for Fiat, but if they go low, the UAW stands to lose. Regardless of where the stock prices go in an IPO, though, it's a move that's being supported by analysts, who are quick to cite Chrysler's near-constant growth and a product lineup that is getting healthier with each new introduction.