Renault-Nissan or PSA? FCA continues to flirt

Fiat Chrysler has been having conversations with PSA top management looking for any kind of strong collaboration between them. The talks aim to close a deal that would go beyond the usual Joint-Ventures that both companies have runned in the past. Even if FCA has declined, it is clear that Manley and his men do not give up with the idea of finding a suitable partner.

PSA’s Opel chased by FCA in the past

This is not the first time the guys from Fiat Chrysler look for a marriage with one of the brands of the French maker. When General Motors gave up and decided to sell its European division, FCA was an active canditate. Marchionne’s goal was to bring Opel/Vauxhall to the mainstream brands group within FCA, increase its presence in Europe and share platforms.

At the end it was PSA the chosen one. In only two years, Carlos Tavares and his team made the impossible: to make Opel profitable again. Subsequently, the French car maker wants more and looks abroad in order to expand its global presence. Opel is due to return to Russia; Citroen will explore the Indian market; and Peugeot wants to sell its models in USA again.

They still can get married

The latest information indicates that the Agnelli’s refused the marriage with PSA due to control issues. At the end PSA is not an entirely private company, with the French government stake at 13.7%. PSA is one of the very few big auto makers to not to have any presence in USA. It is along with Suzuki, the only two of the world’s top 10 by sales to be out of the second largest car market.

It is quite difficult for PSA to enlarge its growth potential without USA. As Iran is not an option anymore, the group needs to find more markets where to grow. You are not global if you are not present in the North American market. As a result, the next step is to bring back Peugeot to USA. The last time the brand sold cars overthere was in 1991.

On the other hand, it will not be an easy task. Even if FCA refused the potential deal, both companies still need to find a partner that helps them to share the electrification costs of the coming years. PSA’s main problem is the French government stake. In FCA, the main obstacle is the opposition of the Agnelli family to concede some of its power.

More disadvantages than benefits

1. Good for Fiat brand: It would gain from having access to a big and updated small cars range from PSA.
2. Good for PSA: it would access to more SUV knowhow from Jeep, and it could use FCA’s presence in USA to go back there.
3. Good but not enough: Combined sales would make of the new group the fourth or fifth largest, almost at the same level of GM.
4. Not good for PSA: both companies together would still be the second in Europe behind VW Group. Currently, PSA is the second largest maker there.
5. Bad for both: they would only improve their presence in Europe, where they have already a strong presence. In contrast, neither of them have a good presence in China/India.
6. Bad: four mainstream brands (Fiat, Citroen, Peugeot and Opel) would be too much for a saturated market like Europe.
7. Very bad: they have both failed in their attempt to bring or revive their premium brands. Both DS and Alfa Romeo/Maserati are struggling to find their place in the premium segment.

Next!

As part of his global domination plan, Carlos Goshn also looked for FCA. I think that the Renault-Nissan alliance is a more suitable candidate for size reasons. They are also very strong in some Asian markets and they have a very good knowhow regarding the electric cars. However, the alliance needs to solve its own problems before bringing on one more partner. I doubt there would be an immediate happy ending regarding the marriage between them.