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Michael Taylor12 Nov 2019
NEWS

PSA-FCA won’t axe Alfa, Vauxhall, Chrysler or DS

Expected cull of underperforming brands won’t happen, Tavares says

The predicted extinction of some of the car industry’s most historic brands following the merger of France’s PSA Group and Italy’s FCA won’t happen, its boss has insisted.

Weaker brands like PSA’s DS premium unit, its British Vauxhall brand and FCA’s Alfa Romeo, Lancia, Maserati and, particularly, Lancia have been assumed to be on the chopping block, along with the moribund Chrysler badge.

Yet PSA CEO Carlos Tavares told a French television show on the weekend that he had no plans to kill off any of the troubled brands.

The $US50 billion merger, which has yet to be ratified by the supervisory boards of the brands and has not yet received approval from the French government (which holds more than 13 per cent of PSA), would control 14 active brands directly.

It also needs approval by the Italian government in Rome, as well as Italian unions.

It will meld PSA’s Peugeot flagship, plus Citroen, ultra-budget brand Aixim, DS and its recently acquired former GM brands Opel and Vauxhall with FCA’s Abarth, Alfa Romeo, Fiat, Lancia, Maserati, Jeep, Dodge, Chrysler and RAM.

It also owns the rights to the Talbot name, last seen in the World Rally Championship in the early 1980s.

Tavares, a protégé of disgraced former Renault head Carlos Ghosn, will head up the fourth-biggest car-maker on earth, behind Toyota, the Volkswagen Group and the Renault-Nissan-Mitsubishi alliance.

"It is part of the challenge to properly manage these brands to cover the market," he told France’s BFM Business program.

"I see that all these brands, without exception, have one thing in common: they have a fabulous history," the noted historic racer said.

"We love the history of car brands, it gives us a foundation on which we can project ourselves into the future.

“So today, I don't see any need, if this deal is concluded, to remove brands because they all have their history and they all have their strengths."

One of its strengths would be that FCA is strong exactly where PSA is weak, in North America. One major downside is that both are weak in China, the world’s largest car market.

PSA makes just 5.7 per cent of its revenues from North America, while the trucks from RAM and the SUVs from Jeep drive that figure to 66 per cent for FCA.

Tavares said the merged group "would indeed have a significant number of brands" but said the number would be lower than Volkswagen Group's tally.

He insisted the merged company would have fewer brands than the Volkswagen Group, which offers the Audi, Porsche, Bentley, Bugatti, Lamborghini, Seat, Skoda, Ducati, Cupra and Chinese startup EV brand Sihao.

It will go head-to-head with Toyota’s ubiquitous name brand, Lexus and Daihatsu, Scion and has a significant shareholding in Subaru and a smaller shareholding in Mazda.

Like Toyota, the other podium contender Renault also has few brands. It has Renault, Dacia and Alpine, while Nissan controls Nissan, Infiniti and Datsun (which it is killing off), while Mitsubishi has just, well, Mitsubishi.

But unlike its rivals, there were plenty of brands in the merged PSA-FCA that looked very shaky indeed, particularly Lancia, DS and Vauxhall.

While Lancia has famously outsold the better-resourced, better-funded Alfa Romeo so far this year, it has just one eight-year-old model on its books and is sold in just one country (Italy).

DS pitched its tent as PSA’s premium brand in 2014 but has never taken off, even in France, while Vauxhall has long been just a badge on German-engineered Opels, though they are built in England.

Despite the losses and having a lumbering potential workforce of 400,000 spread from Italy and France to Poland, China, the USA and Brazil, Tavares is confident it will all gel together.

"There's no doubt it's a very good deal for both parties. It's a win-win," he said.

Though all the brands might survive, all the jobs won’t, with Tavares’ team set to unveil a plan in October to cut $US4.09 billion a year in cost savings.

Alfa Romeo last week announced it will slash a number of previously planned models, including its born-again GTV coupe plus promised 8C supercar and large SUV models.

"That's the car industry, it's not about PSA," Tavares said.

"Margins are continually under pressure and you have to permanently be looking for productivity gains.

"Given all the necessary regulatory approvals that need to be granted, such a deal cannot be closed in less than a year," he said.

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Written byMichael Taylor
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