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Why FCA-PSA merger is no quick fix for their China problem

BEIJING — Fiat Chrysler and Peugeot owner PSA's merger is unlikely to provide a quick fix to their problems in China, as both companies have long struggled to find the right products at the right price for the world's top car market, analysts say. The companies said on Thursday they aimed to reach a binding deal in the coming weeks to create the world's fourth-biggest automaker by production volume. But scale alone will not make Italian-American Fiat Chrysler Automobiles (FCA) and France's PSA Group more competitive in a market where they have been slow to adapt to trends and win over consumers, leading their sales to lag far behind foreign rivals such as Volkswagen and General Motors. PSA does not have enough competitive SUV models, and neither company has enough electric and plug-in hybrid vehicles, or enough cars packed with hi-tech features for Chinese tastes, analysts say. In a market where 28 million cars were bought in 2018, FCA sold just 155,215, while PSA sold 257,723, according to consultancy LMC Automotive. At the end of September, FCA had a market share of 0.5% in China's passenger car market, while PSA's was 0.6%. Analysts say they have been squeezed by Japanese and local brands, which have product line-ups better suited to Chinese tastes at cheaper prices. "Both companies are very home-market centred and have failed to adapt to shifts in Chinese market preferences," said Bill Russo, head of Shanghai-based consultancy Automobility Ltd and a former senior Asia-based Chrysler executive. "Neither company has recognized and delivered on the trends of shared, connected and electric vehicles,” Russo said. That makes them ill-prepared to deal with further shifts in the Chinese market, which saw annual sales contract for the first time since the 1990s last year and is expected to see another drop this year. "China's overall market is experiencing a transmission and adjustment period," said Alan Kang, a Shanghai-based senior analyst at LMC Automotive. "It is very hard for these two companies, which do not have enough competitive up-to-date products, to quickly recover with the merger." FCA has a partnership in China with Guangzhou Automobile Group, which said on Thursday it backed the merger. PSA has been trying to reboot its operations in China.

Junkyard Gem: 1954 Plymouth Savoy Sedan

American car shoppers bought many millions of the four-door sedans that flew off Detroit's assembly lines in the decade after World War II, and so plenty of them still remain in barns, garages, driveways and yards today, awaiting loving owners who will put them back on the road. Unfortunately, those with the time and money to take on challenging vintage automotive projects tend to prefer coupes and convertibles, especially those made by the higher-prestige marques. That means that many of these cars continue to run out of time with each passing day, taking that final tow-truck ride to their very last parking spaces. Today's Junkyard Gem is one of those cars: a 1954 Plymouth Savoy four-door painted in Piedmont Maroon, found in a Denver self-service yard recently. As an example of how many of these cars still get crushed each year, here's a partial list of some of the 1946-1956 American four-door sedans I've personally documented in car graveyards over the last decade or so: 1947 Dodge Custom, 1947 Frazer Manhattan, 1948 Plymouth Special Deluxe, 1949 Dodge Coronet, 1949 Kaiser Special, 1949 Oldsmobile 88, 1949 Plymouth Special Deluxe, 1950 Cadillac Sixty-One, 1950 Chrysler Royal, 1950 Studebaker Commander, 1951 Chevrolet Styleline, 1951 Frazer, 1951 Lincoln Cosmopolitan, 1951 Plymouth Cranbrook, another 1951 Plymouth Cranbrook, 1952 Kaiser, 1952 Buick Special, 1952 Mercury Custom, 1953 Packard Clipper, 1953 Plymouth Special, 1953 Pontiac Chieftain, 1955 Studebaker Commander, 1956 DeSoto Fireflite and a 1956 Mercury Montclair. It's especially tough for the 1946-1954 Plymouths, because those cars were seen as stodgy transportation appliances for cheapskates when they were new. As the 1940s became the 1950s, most American cars became longer, sleeker and flashier-looking, but Plymouths seemed to stay the same. For the 1955 model year, Plymouths got a clean-sheet redesign and caught up with current styling trends well enough (probably not coincidentally, Plymouths finally got their own dealerships in late 1954, rather than just being sold out of Chrysler, DeSoto and Dodge showrooms). But for 1954, the best Chrysler could do with the looks of the increasingly aged-looking Plymouth was give it a new grille and some body chrome. Bumpers were made to stick out a few extra inches to cheat on the overall length a bit.

Stellantis mega-merger gets approval from FCA, PSA shareholders

MILAN — Shareholders of Fiat Chrysler and PSA Peugeot decisively voted Monday to merge the U.S.-Italian and French carmakers to create worldÂ’s 4th-largest auto company. Addressing separate meetings, both PSA Peugeot CEO Carlos Tavares and Fiat Chrysler Chairman John Elkann spoke of the “historic” importance of the vote, which combines legacy car companies that helped write the industrial histories of the United States, France and Italy. Before the merger is finalized, shares in the new company, to be called Stellantis, must the launched. It will be traded in Milan, New York and Paris. The marriage of PSA Peugeot and Fiat Chrysler Automobiles is built on the promise of cost-savings in the capital-hungry industry, but what remains to be seen is if it will be able to preserve jobs and heritage brands in a global market still suffering from the pandemic. The deal will create the worldÂ’s fourth-largest carmaker, with the capacity to produce 8.7 million cars a year, behind Volkswagen, Toyota and Renault-Nissan, and create 5 billion euros in annual synergies.  “We are fully aware of the fact that together we will be stronger than individually,'' PSA CEO Carlos Tavares told a virtual gathering of eligible shareholders. “The two companies are in good health. These two companies have strong positions in their markets.” The new company will put together under one roof French mass-market carmakers Peugeot and Citroen, top-selling Jeep and Italian luxury and sports brands Maserati and Alfa Romeo - pooling companies that have helped define the industry in the United States, France and Italy. While the tie-up is billed as a merger of equals, the power advantage goes to PSA, with Tavares running Stellantis and holding the tie-breaking vote on the 11-seat board. Tavares is set to take full control of the company early this year, possibly by the end of January. Fiat Chrysler chairman John Elkann, heir to the Fiat-founding Agnelli family and Fiat ChryslerÂ’s biggest shareholder, will be the Stellantis chairman. Fiat Chrysler CEO Mike Manley will head North American operations, which is key to Tavares' long-time goal of getting a U.S. foothold for the French carmaker he has run since 2014, and the clear money-maker for Fiat Chrysler. Such a deal was long wanted by Fiat ChryslerÂ’s long-time CEO Sergio Marchionne, who had predicted the necessity of consolidation in the industry. He was unable to find a deal before his sudden death in July 2018.