The merger of Fiat Chrysler Cars and PSA Group to kind Stellantis will handle two of FCA’s most urgent points: A struggling European enterprise based mostly on an getting old product vary, and uncertainty the way it will meet future emissions targets with comparatively few electrified automobiles within the product pipeline.

Many FCA automobiles are anticipated to maneuver to PSA’s state-of-the-art platforms within the coming years. The extra volumes on the platforms will profit each side of Stellantis, reducing manufacturing and growth prices per unit and rising buying synergies. 

That is significantly essential because the business struggles to get better from the COVID-induced market droop, which has closely affected gross sales. PSA’s and FCA’s mixed international gross sales fell 28 % by September, in response to JATO Dynamics, whereas figures for Europe (EU plus the UK, Norway, Switzerland, Iceland and Luxembourg) present by the business group ACEA present a 36 % droop. 

FCA misplaced almost 1 billion euros in Europe ($1.2 billion) within the first 9 months of 2020 however was struggling to interrupt even earlier than the disaster, shedding 6 million euros in 2019.

“Fiat Chrysler’s largest drawback in Europe is a really aged product vary,” Bernstein analyst Arndt Ellinghorst wrote in a September report on the European auto sector, including that FCA “wants a whole overhaul.” 

Ellinghorst mentioned that the late FCA CEO Sergio Marchionne had underinvested in Europe as a result of he couldn’t see a worthwhile return on funding within the area. With the group nonetheless indebted, Marchionne, who died in July 2018, relied on a method of slicing prices, hoping a future purchaser or merger associate would handle the issue.

Probably the most speedy assist FCA can get in Europe comes from PSA’s up-to-date platforms. FCA has already advised its suppliers that its subsequent technology of small cars will swap to PSA’s Frequent Modular Platform (CMP).  

In its word to suppliers, FCA mentioned it can construct three CMP-based small automobiles in its plant in Tychy, Poland. The manufacturing unit at the moment makes the Fiat 500 and Lancia Ypsilon. FCA advised suppliers it can construct as much as 400,000 models a 12 months of CMP-based fashions in Tychy for the Alfa Romeo, Fiat and Jeep manufacturers.
 
The CMP platform underpins PSA automobiles together with the brand new Citroen C4, Peugeot 208 and 2008, Opel/Vauxhall Corsa and the brand new Mokka in addition to the DS3 Crossback. All these fashions have inner combustion engines in addition to full-electric variants, thus enabling FCA to meet up with the electrification of its product vary.
 
The choice to maneuver to CMP will assist FCA execute its technique of abandoning the minicar segment to deal with promoting small automobiles, a transfer introduced by CEO Mike Manley in October 2019.
 
FCA might additionally leverage two different PSA platforms. One, EMP2, which underpins compact and midsize fashions, together with the extremely worthwhile and powerful promoting Peugeot 3008 crossover, has not too long ago undergone a revamp. 

PSA is getting ready a new electric-first platform, e-VMP, which is derived from EMP2. It is going to be used from 2023 or 2024 onward, beginning with the next-generation 3008, PSA CEO Carlos Tavares said in an interview with Automotive Information Europe, though EMP2-based automobiles will proceed to be produced.

Utilizing these platforms on Fiat, Lancia and Jeep fashions might assist FCA rapidly rejuvenate its product vary at a lot decrease growth value. It might additionally assist fill its European vegetation, that are working at lower than 50 % of their capability.
 
The transfer may additionally assist revive Alfa Romeo, which has seen gross sales plummet and has simply two new fashions in its product plan. Certainly one of them, the Tonale compact SUV, shall be based mostly on present Jeep Compass’ underpinnings and also will have a plug-in hybrid variant. The opposite is a small SUV, as a result of have a battery-electric variant, to be inbuilt Poland underpinned by the CMP platform.
 
Alfa Romeo’s midsize fashions are on the front-engine, rear-wheel drive/all-wheel-drive Giorgio platform, which will even be used for the Maserati Grecale, a midsize SUV anticipated in late 2021.
 
At a presentation in September, Manley mentioned that Maserati would preserve its place inside Stellantis, however as a luxurious model it could have restricted synergies with the group’s mass-market choices.  

FCA has largely underinvested in electrification, as Marchionne was famously skeptical about electrical automobiles. In late 2019, when the merger with PSA was introduced, FCA had no electrified automobiles in its European product vary. It depends on pooling its European gross sales with Tesla to keep away from probably enormous fines for not reaching the CO2 emissions targets set by the EU, at a value of 1.8 billion euros over three years.

“FCA’s CO2 outlook stays a fabric threat to 2021 emissions targets {that a} potential acquirer could be taking over, with inadequate time to handle it down to satisfy targets,” Morgan Stanley mentioned in an October 2019 report.
 
FCA has launched three rechargeable automobiles in 2020: the full-electric Fiat New 500 and plug-in hybrid variations of the Jeep Renegade and Compass. It additionally launched gentle hybrid variations of the Fiat 500 and Panda minicars, the Lancia Ypsilon small automotive and the Maserati Ghibli midsize sedan.
 
However PSA already has a a lot wider vary of full-electric automobiles. It sells the Peugeot 208 and 2008, Opel/Vauxhall Corsa and Mokka X, DS 3 Crossback, and Citroen C4. Its plug-in hybrid vary contains the DS 7 and DS 9, Peugeot 3008 and 508, Citroen C5 Aircross, and Opel/Vauxhall Grandland.
 
In reviving Opel after shopping for it from GM in 2017, PSA has proven that electrified fashions could be built-in rapidly and at a comparatively low value to a different model.

PSA will even deliver to Stellantis its technique of vertical integration of all elements of future electrified automobiles, by varied joint ventures together with with Saft in battery cells and with Nidec in electrical motors.