Following the news that the shareholders of Peugeot- Citroën (PSA) and Fiat-Chrysler (FCA) have approved the proposed merger to create Stellantis, Mike Vousden, Automotive Analyst at GlobalData, offers his view.
“Stellantis’s leadership will be hoping the newly merged group can tackle some of the specific weaknesses that affected FCA and PSA prior to the merger agreement.
“Most pressing is the group’s weakness in China – the world’s largest car market and a vital growth engine for any international auto player. Despite continued efforts from both partners, neither has been able to establish a strong sales base in the country or capture the market’s imagination with a stand-out model.
“This weakness is increasingly exacerbated by the rapid pace of improvement shown by China’s home-grown automakers, undercutting many foreign automakers.
“Industry estimates put both PSA and FCA’s capacity utilization in Asia-Pacific at just 8%, with most of that capacity concentrated in China.
“However, the Stellantis merger gives them a better chance at success than as separate competitors. Sharing rebranding costs, along with production facilities and distribution networks will spread the financial burden more widely across the newly formed group, reducing the risk to both parties and increasing the chances of gaining a foothold in the world’s most important vehicle market.”