RE: FCA, PSA make merger talks official
Discussion
nickfrog said:
Fast Bug said:
I understand that Renault pulled the plug when they realised how much money it could cost them to meet the 2021 average vehicle emissions level with FCA onboard. The Fiat range is also old and in major need of updating, nobody buys Lancia product and Alfa has seen lots of investment and still aren't selling.
Why on earth would you want to be saddled with that?
You'd better call PSA to let them know they're making a mistake. Why on earth would you want to be saddled with that?
It's not Renault who pulled the plug, it's a 15% share holder aka the French govt.
www.carmagazine.co.uk/car-news/industry-news/co2-e...
janesmith1950 said:
My understanding is they're way behind on EV and so need to hook up in an attempt to catch-up.
Plenty of time for the deal to fall through, as France wants to be the boss and Italy wants to be the boss, despite PSA paying a circa 32% premium for FCA in a '50/50' merger.
Or by not investing billions into a product that their traditional consumer base can not afford they have put themselves way ahead in EVs? Plenty of time for the deal to fall through, as France wants to be the boss and Italy wants to be the boss, despite PSA paying a circa 32% premium for FCA in a '50/50' merger.
Just look at the brands within both groups and chose which ones are ideal for selling expensive, impractical, large cars through to consumers with excess income etc etc.
It’s the same reason why Ford are targeting using VW’s platform. All these brands dominate the bottom of the market where the vast majority of Western consumers are, where the most popular new car is the Fiesta at £12k and almost all product sales are under £22k.
Brands like Audi, Jaguar and BMW have large customer bases who have the income to spend well above the average on cars, they have the wealth to want to try something new, the desire to stand out from peers or to indulge in trends, they own houses that are large enough to accommodate home charging and second cars. These are brands that can sell EVs today while EVs remain so expensive to build and so restricted in their use.
The average customer of brands such as Vauxhall, Fiat etc simply do not have the lifestyle where they can indulge themselves in big ticket purchases that are more expensive than they can get a credit line for and less practical. These brands must tread a different path to EV because of the current economics. They must effectively wait until EVs can be built for a price that doesn’t make them an indulgence for the affluent consumer but a cheaper tool than their petrol equivalent.
Until then volume and therefor profit and survival very much rests on the volume products and honing their margins while at best making token gestures towards EVs such as a Zoe equivalent until the economics add up for EVs to sell and be in demand at their brand price points in the enormous volumes required to extract profit from tight margins etc.
Edited by DonkeyApple on Friday 1st November 09:56
Fast Bug said:
nickfrog said:
Fast Bug said:
I understand that Renault pulled the plug when they realised how much money it could cost them to meet the 2021 average vehicle emissions level with FCA onboard. The Fiat range is also old and in major need of updating, nobody buys Lancia product and Alfa has seen lots of investment and still aren't selling.
Why on earth would you want to be saddled with that?
You'd better call PSA to let them know they're making a mistake. Why on earth would you want to be saddled with that?
It's not Renault who pulled the plug, it's a 15% share holder aka the French govt.
www.carmagazine.co.uk/car-news/industry-news/co2-e...
Fast Bug said:
GTEYE said:
galro said:
Fast Bug said:
The Fiat range is also old and in major need of updating, nobody buys Lancia product and Alfa has seen lots of investment and still aren't selling.
Lancia actually sells a surprisingly many cars given that their line-up consist of one single car that have been around since 2011 and they are only sold in one market (Italy). They have outsold Alfa Romeo in Europe during the first half of 2019.
https://fiatgroupworld.com/2019/07/22/absurd-lanci...
The deal is basically a merger of a dozen or more brands that no consumers actually wants or aspires to but some prefer as a last resort over the Korean or Chinese options for a utility box that is left on the street and used to transport people from A to B as affordable as possible.
These aren’t the brands of apex consumer champions, winners, successful entrepreneurs, CEOs of off the shelf companies. These are the brands for normal people with normal jobs with normal incomes, living normal lives who just need a box that will get them from their house to where they need to go in a reliable and cost efficient manner. The brands that so long as Mr Apex Consumer can keep borrowing money will pay a premium to have absolutely nothing to do with with they are terrified of Mr Normal and his perfectly normal existence.
RSchneider said:
Another idea: Not PSA-FCA but PSA-F. Selling Chrysler/Jeep/RAM and forget about North America. Might actually save a lot of headaches with U.S. Gov, especially concerning PSA's Iranian and Chinese presence.
PSA presences in Iran and China are basically irrelevant. They sold just 77,700 cars during the first half of 2019 in China and it dropped 50% over last year, so it looks like they are taking care of that themselves - no Trump needed here!Here is a graph showing what region the sale figures for this new company comes from:
Edited by galro on Friday 1st November 11:07
GTEYE said:
A worrying position for Alfa. It shows they sold only 5000 Giulias in the whole of Europe in H1 2019.....I wonder how many the German brands shifted...
Here you see the comparison with the German (and American) brands: 
It's also worth noting that Alfas position is actually even worse than that graph can give the impression of at first, as the estate versions are separated from the sedans and Alfa have naturally no estate sales.
https://fiatgroupworld.com/2019/08/25/europe-h1-19...
Edited by galro on Friday 1st November 11:19
tty V6.mehnickfrog said:
Except Renault didn't, they were quite upset that the French gvt vetoed any progress only 2 weeks after the start of the process... Massive controversy in France which has been amply documented... but mainly in the French press.
That differs from what I was told by someone at Renault UK. Doing some digging it seems FCA pulled out and blamed the French government who have denied putting up objections. It's a blessing in disguise in all honesty!
DonkeyApple said:
These are two companies that basically sell products to people who can’t afford what they reall want but haven’t yet had to resort to buying an MG. the moment a consumer does have the money to indulge their desires they are clearly going for the German car that they have coveted for so long rather than moving up inside the company to an Alfa etc. I suspect most Alfa sales are to ex German car buyers who wanted something a little less Germanic for a change.
Jesus christ, what absolute nonsense. Fast Bug said:
nickfrog said:
Except Renault didn't, they were quite upset that the French gvt vetoed any progress only 2 weeks after the start of the process... Massive controversy in France which has been amply documented... but mainly in the French press.
That differs from what I was told by someone at Renault UK. Doing some digging it seems FCA pulled out and blamed the French government who have denied putting up objections. It's a blessing in disguise in all honesty!
If you know something that PSA don't, I would suggest you monetise that and give them a call.
VW is the pre-eminent car company when it comes to sharing platforms and components across several brands. It took them several years to achieve this status though they put it all at risk with the diesel scandal. They have now made a huge bet on a new EV platform (in penance?).
This proposed PSA-FCA merger is starting very late in the day to accomplish the rationalisation of factories, platforms, components, brand positioning, dealer networks and management structures that will be needed to make it a success. Moreover it has to do it in a declining market, with no obvious EV or any visibility how the EV market will evolve. That said it has some profitable products and markets on which to build a future - provided they can navigate the difficult political waters of the plant closures that may be required to more closely match capacity with demand.
This proposed PSA-FCA merger is starting very late in the day to accomplish the rationalisation of factories, platforms, components, brand positioning, dealer networks and management structures that will be needed to make it a success. Moreover it has to do it in a declining market, with no obvious EV or any visibility how the EV market will evolve. That said it has some profitable products and markets on which to build a future - provided they can navigate the difficult political waters of the plant closures that may be required to more closely match capacity with demand.
Killer2005 said:
DonkeyApple said:
These are two companies that basically sell products to people who can’t afford what they reall want but haven’t yet had to resort to buying an MG. the moment a consumer does have the money to indulge their desires they are clearly going for the German car that they have coveted for so long rather than moving up inside the company to an Alfa etc. I suspect most Alfa sales are to ex German car buyers who wanted something a little less Germanic for a change.
Jesus christ, what absolute nonsense. oldtimer2 said:
VW is the pre-eminent car company when it comes to sharing platforms and components across several brands. It took them several years to achieve this status though they put it all at risk with the diesel scandal. They have now made a huge bet on a new EV platform (in penance?).
That's only sustainable so long as increasing sales means they're happy to permit one sub-brand to cannibalise sales from another; but if growth slows or halts, for how long will they let Superb sales eat into Passat sales for example? The whole VAG branding experiment seems very precarious, particularly SEAT's weakness and Skoda's strength.
rockin said:
The secret of success is to merge two good companies to become one good company.
Merging two crap companies just creates one big, crap company.
Very true. There must be some savings and efficiencies to be made during the next product cycle if they follow VW and just built one car for each segment and then market it through the selection of brands. Merging two crap companies just creates one big, crap company.
I think the real issue is that most of their brands seem to sell in the same markets rather than there being a nice wide global spread.
The products are actually absolutely fine but most of their business seems to be US and EU where plentiful money supply to consumers allows them to indulge their desires of getting more premium vehicles.
If those two markets were to contract the supply of consumer debt then they would be rather well placed to expand sales at the expense of German brands, a bit like Waitrose shoppers reverting to Tesco’s during a recession but for the last two decades the consumer money supply has mostly been growing not contracting.
DonkeyApple said:
Killer2005 said:
DonkeyApple said:
These are two companies that basically sell products to people who can’t afford what they reall want but haven’t yet had to resort to buying an MG. the moment a consumer does have the money to indulge their desires they are clearly going for the German car that they have coveted for so long rather than moving up inside the company to an Alfa etc. I suspect most Alfa sales are to ex German car buyers who wanted something a little less Germanic for a change.
Jesus christ, what absolute nonsense. 
Excellent use of gifFA57REN said:
oldtimer2 said:
VW is the pre-eminent car company when it comes to sharing platforms and components across several brands. It took them several years to achieve this status though they put it all at risk with the diesel scandal. They have now made a huge bet on a new EV platform (in penance?).
That's only sustainable so long as increasing sales means they're happy to permit one sub-brand to cannibalise sales from another; but if growth slows or halts, for how long will they let Superb sales eat into Passat sales for example? The whole VAG branding experiment seems very precarious, particularly SEAT's weakness and Skoda's strength.
All manufacturers face the risk of cannibalisation of sales between product lines, even within the same brand. It is an inherent risk. The bigger risk comes with company mergers. It was research conducted some years ago, but probably still holds true today, that demonstrated that about half of mergers will succeed and half will fail. On that basis the proposed PSA-FCA merger has a 50/50 chance of success.
Volkswagen have "just" three mainstream brands (Volskwagen, Seat and Skoda) and one premium brand (Audi) though and I think they only offers Volkswagen and Audi in markets outside of Europe.
The FCA-PSA will have nine brands which are supposed to be mainstream (Chrysler, Dodge, Fiat, Lancia, Opel, Vauxhall, Peugeot, Citroen) and three brands that are supposed to be somewhat premium (Alfa Romeo, DS, Jeep). Some are only offered in select markets of course, but even still it seems to me like FCA-PSA will have a much greater task in front of them if they are going to provide competitive products for all of their brands.
The FCA-PSA will have nine brands which are supposed to be mainstream (Chrysler, Dodge, Fiat, Lancia, Opel, Vauxhall, Peugeot, Citroen) and three brands that are supposed to be somewhat premium (Alfa Romeo, DS, Jeep). Some are only offered in select markets of course, but even still it seems to me like FCA-PSA will have a much greater task in front of them if they are going to provide competitive products for all of their brands.
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