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PSA reportedly ditching its two tiny gasoline city cars ahead of merger

The Peugeot 108.   PARIS — PSA is ending the production of Peugeot and Citroen small city cars, three sources told Reuters, withdrawing from an increasingly unprofitable market as its starts a strategic review ahead of its planned merger with Fiat Chrysler. While PSA had already agreed to sell its stake in its Czech joint venture with Toyota where the Peugeot 108 and Citroen C1 models are made, the decision to stop selling the gasoline cars altogether has just been taken, the sources said. Carmakers are reviewing the production of vehicles with combustion engines as they need to fit costly exhaust filtering systems to meet tighter emissions laws. That's pushing up the cost of some so-called entry-level A segment cars to the point where they are hard to justify economically. "PSA is getting out of both the factory and the A segment business, as it is offered today, and on which manufacturers have arguably lost the most money in Europe," one of the sources familiar with the matter said. PSA declined to comment on the future of the two small cars. It said it was reviewing which products would best meet customer expectations in the A segment and cope with European carbon emissions targets. "This means a reflection with fresh and disruptive ideas," a spokesman for the French carmaker said. The European Commission is planning to tighten its emissions limits for cars under new proposals designed to cut the bloc's greenhouse gas output further by 2030. PSA's merger project with FCA has also increased the options available, two of the sources said, as the Italian-U.S. company has no intention of abandoning its small best-selling Panda and 500 models. Both already have hybrid versions and the 500 is also available in full electric mode. "Current projects could be replaced by new ones made possible by the merger with FCA", another source said. "The merger is turning all the cards around, especially when you consider that the A segment, from the very first 500 to the Panda, is inseparable from Fiat history". FCA declined to comment. PSA and FCA aim to finalize their merger in the first quarter next year to create a new company called Stellantis, which will be the fourth-biggest automaker in the world. Market contraction The European market for frugal city cars has been shrinking for several years.

Merged PSA and Fiat would retain all brands, Tavares says

By Elisa Anzolin and Gilles Guillaume PARIS/TURIN, Italy (Reuters) - Peugeot maker PSA Group and Fiat Chrysler would retain all of their car brands if their planned $50 billion merger goes ahead, the would-be chief executive of the combined group said on Friday. PSA CEO Carlos Tavares, seen as the architect of PSA's turnaround and in line to take the operational helm in the Fiat tie-up, said in a TV interview that the companies complemented each other well geographically and in terms of technology and brands. FCA derives 66% of its revenue from North America compared with only 5.7% for PSA, Refinitiv Eikon data shows. Europe remains the main revenue driver for PSA. "There's no doubt it's a very good deal for both parties. It's a win-win," Tavares told France's BFM Business, in his first interview since the French and Italian companies announced plans to create the world's fourth-largest auto maker last week. Fiat Chrysler (FCA) Chairman John Elkann, who would chair the combined group, said on Friday at an event in Turin that the 50-50 share merger would help the Italian carmaker "seize great opportunities." The deal, which would help the firms pool resources to meet tough new emissions rules and investments in electric and self-driving vehicles, as well as counter a broader downturn in car markers, is still at an early stage. PSA and Fiat have said they aim to reach a binding outline in the coming weeks, but still face questions over potential job losses, as well as scrutiny over whether the transaction favors one party more than the other. Tavares said the brands that would come under the combined group's umbrella — PSA's five passenger car nameplates include Citroen, Vauxhall and Opel, while FCA has nine, including Fiat, Alfa Romeo, Maserati, Chrysler, Dodge and Jeep — were all likely to survive. "As of today, I don't see any need to scrap any of the brands if the deal came to pass. They all have their history and their strengths," Tavares said. Few carmakers have as large a portfolio, with German rival Volkswagen Group counting 10 passenger brands, if newer Chinese ones such as electric vehicle label Sihao are included. The merger will also require approval from anti-trust authorities. Tavares said he did not expect the companies to have to make major concessions to meet competition rules, but added they were ready to do so, without giving details.

Hurricane Sandy cost automakers 15,000 vehicles, may have ruined up to 200k

Hurricane Sandy was the largest Atlantic storm in US history, and its total economic impact is just now coming into view. According to Automotive News, Toyota, Chrysler, Nissan and Honda are set to scrap around 15,000 new vehicles ruined by the storm. Nissan alone accounts for about 40 percent of those, with 6,000 Nissan and Infiniti models deeded "un-saleable" due to damage. The company saw 56 dealerships shuttered due to the storm, but 51 of those have since reopened.
Toyota, meanwhile, had some 4,000 vehicles at its Newark port facility, and of those, 3,000 may be scrapped. An additional 825 were dealer inventory when they were ruined. Honda and Acura dealers are reportedly sending 3,440 vehicles to the salvage yard. By comparison, Chrysler weathered the storm fairly well with 825 units destroyed, while Hyundai suffered only 400 lost units and Kia scrapped around 200.
As you may recall, Fisker also suffered some losses, and Automotive News reports the manufacturer saw 320 Karma models damaged beyond repair. Ford and General Motors have yet to come up with estimates, and no automaker has commented on the full cost of replacing the vehicles.