RE: FCA, PSA make merger talks official
Discussion
nickfrog said:
It's about scale, not brands. The latter is relatively fixable. The former is pivotal.
I don't think it is easily fixable. If it were then I don't think FCAs line-up would have been such a mess in the first place. I think they will really struggle with where to position their brands and killing off the redundant ones without pissing off customers. nickfrog said:
It's about scale, not brands. The latter is relatively fixable. The former is pivotal.
I imagine that what they need to do is phase out all the different platforms across the brands and create a single line of platforms that each brand just adds its ethos to, as per VW. While punting all the FCA finance through the PSA license to eek out the best returns there? And of course, reduce head count and even locations?PSA has the best margin in the business. Now they've found the secret sauce for that margin they know they can scale it.
FCA is a bit rag tag and doesn't have the scale or the profitability to invest for the electric future.
There is a good fit for combining the two and giving more scale to PSA and better margin for FCA and better ROI on investment into electric.
All this talk of brands and the aspirational aspect is relatively meaningless, as they're already selling volume of white goods at a profit. Not everybody sees a car as a piece of jewellery or an extension of their image. Many people and businesses just want something well priced, featured, reliable and efficient. Which is why you now see so many Hyundais and Kias springing up.
FCA is a bit rag tag and doesn't have the scale or the profitability to invest for the electric future.
There is a good fit for combining the two and giving more scale to PSA and better margin for FCA and better ROI on investment into electric.
All this talk of brands and the aspirational aspect is relatively meaningless, as they're already selling volume of white goods at a profit. Not everybody sees a car as a piece of jewellery or an extension of their image. Many people and businesses just want something well priced, featured, reliable and efficient. Which is why you now see so many Hyundais and Kias springing up.
Edited by janesmith1950 on Saturday 2nd November 17:53
galro said:
I don't think it is easily fixable. If it were then I don't think FCAs line-up would have been such a mess in the first place. I think they will really struggle with where to position their brands and killing off the redundant ones without pissing off customers.
The redundant brands have no customers left - the only thing keeping them is legacy, and risk of dealer/union action.The above few posts are all really poignant. Scaling up a la VW will give much greater efficiency. And the PSA turnaround was all about efficiency, and nothing about brand positioning. If they can repeat the same thing with FCA cars, plants and volume, it could be quite a formidable force. Yes, a white-goods force, but one that is economically efficient and sustainable.
It doesn't bode well for the outlier/halo brands in the short term, as that doesn't appear to carry much weight with PSA and their strategy. In the long term, it could be the only thing that saves the likes of Alfa, if it frees up investment and allows Alfa to achieve some sort of positioning where they serve a purpose, something it currently doesn't do successfully, even within the FCA family. Alfa has a lot of brand history, but there is very little aspiration around it in the "mass market", and even within FCA they can't funnel customers who want an upgrade from a Fiat into an Alfa - they tend to lose them all to the Germans.
SuperPav said:
The redundant brands have no customers left - the only thing keeping them is legacy, and risk of dealer/union action.
I wouldn't say that is true. Lancia somehow shift a lot of Ypsilons still, Fiat still leads the supermini sector in Europe, the Challenger and the Charger is still going strong for Dodge in the USA, Chrysler are still selling a good number of minivans etc. In fact they have a number of brands that are actually doing really well in some sectors despite seemingly being left to die without any worthwhile investments. The proper sales disasters and where they are the least likely to recoup the investments (based on recent sales trends) appears to be Maserati and Alfa Romeo, but that are incidentally also brands that I suspect they are the least likely (besides Jeep) to consider redundant and which likely have the most passionate fans, both inside and outside of corporate walls.
galro said:
SuperPav said:
The redundant brands have no customers left - the only thing keeping them is legacy, and risk of dealer/union action.
I wouldn't say that is true. Lancia somehow shift a lot of Ypsilons still, Fiat still leads the supermini sector in Europe, the Challenger and the Charger is still going strong for Dodge in the USA, Chrysler are still selling a good number of minivans etc. In fact they have a number of brands that are actually doing really well in some sectors despite seemingly being left to die without any worthwhile investments. The proper sales disasters and where they are the least likely to recoup the investments (based on recent sales trends) appears to be Maserati and Alfa Romeo, but that are incidentally also brands that I suspect they are the least likely (besides Jeep) to consider redundant and which likely have the most passionate fans, both inside and outside of corporate walls.
Fiat still very much has a marketplace, they just need to keep costs low. Similarly the US brands - there is a market for them, but to compete with the others on a level playing field, they need to improve efficiency.
The UK is somewhat weird in this regard - I still don't understand how Alfa can have such an appalling dealer network by all accounts (I personally haven't ever owned an Alfa so am relying on heresay within the industry), given their significant struggle to shift any meaningful volume
galro said:
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.
Don’t forget Maserati and Abarth 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.
SuperPav said:
I guess I should have specified - by redundant brands I meant Alfa, Lancia, Maserati in that the loyal customers aren't a large enough group to be sustainable, and the non-loyal customers will happily jump ship. The Ypsilon is a great example - I don't believe anybody is buying it because of some sort of amazing brand loyalty, it is because in Italy there is wide dealer network, and the cars are dirt cheap.
others on a level playing field, they need to improve efficiency.
The UK is somewhat weird in this regard - I still don't understand how Alfa can have such an appalling dealer network by all accounts (I personally haven't ever owned an Alfa so am relying on heresay within the industry), given their significant struggle to shift any meaningful volume
I agree re Alfa Romeo and Maserati, but the thing is that I don't think they will kill off those two brands (at least not both of them) for two reasons: others on a level playing field, they need to improve efficiency.
The UK is somewhat weird in this regard - I still don't understand how Alfa can have such an appalling dealer network by all accounts (I personally haven't ever owned an Alfa so am relying on heresay within the industry), given their significant struggle to shift any meaningful volume
1. Pretty much every manufactures around wants to move up the value chain and compete in the premium segment along with the German brands. Out of all the brands, it's those two (along with Jeep but only for Suvs) that are the best positioned to compete in this segment based on their legacy, current line-up and probably the demographics of their (few) former customers.
2. Especially Alfa Romeo have very sentimental place in many peoples heart. The public in general do not buy their cars, but still view as a very important brand for the culture of cars and even for the national identity of Italy. Killing it off would likely royally piss of them and I don't think the company could afford all that bad publicity. At least not until Italy and Europe becomes a lot less relevant for them.
As for Lancia I agree that probably aren't that many people that buys it because it a Lancia. I do however suspect that there are quite a number of people that buys it because it is Italian. Many of those customers would perhaps move over to Fiat (it is worth noting that the Ypsilon actually outsell the 500 in Italy), but I think things like that seriously limit how much they do with the brands unlike with Volkswagen (whom had a lot fewer brands in the first place). Same goes for Dodge in the USA. I believe you need to keep some of these local brands with cars with localised characteristics if they are going to retain their current customers.
The alternative is of course to let go of those customers but that would also mean that they would pull out of sectors where they are surprisingly competitive in and which likely are highly profitable due to lack of r&d money that have been put into them. For example the 11-year old Challenger design still post sales numbers that are comparable or better than their competition.
https://www.motor1.com/news/374463/dodge-challenge...
craigjm said:
Don’t forget Maserati and Abarth
They have indeed more brands, but I don't think these brands come with the same mass market ambitions. I see Maserati as more of a competitor to Porsche and perhaps Bentley, although it is not doing a particularly good job at it. Abarth is more like Fiats M-/AMG-division and I don't think they will have any problem justifying that brand as long as they manage to keep the Fiat cooking models around. Good grief, they've actually done it.
https://www.autocar.co.uk/car-news/industry/psa-gr...
So now we find out whether combining three mediocre companies can create one good one.
https://www.autocar.co.uk/car-news/industry/psa-gr...
So now we find out whether combining three mediocre companies can create one good one.
Well I wish them luck. They will need it. There will be tricky political waters to navigate if/when they start to close factories and sack thousands of employees. The article quotes current vehicle sales of 8.7 million and potential capacity of 14 million - that is only 62% utilisation. And the global car market is in decline.
Humbug.....call me old fashioned.....but when I think of quality reliable cars, none of these companies spring to mind.
It's like sweeping up the all the dead wood and try to make a successful empire out of it all.
I do hope I'm wrong but one thing I can say is a lot of the top brass will make a killing out of this which ever way it goes.
Before anyone says it.....yes I would love a Dodge Challenger if only the build quality and rust protection were acceptable. There really is no excuse for those issues.
It's like sweeping up the all the dead wood and try to make a successful empire out of it all.
I do hope I'm wrong but one thing I can say is a lot of the top brass will make a killing out of this which ever way it goes.
Before anyone says it.....yes I would love a Dodge Challenger if only the build quality and rust protection were acceptable. There really is no excuse for those issues.
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