Inertia Report: The FCA Issue and Why The PSA Merger Probably Won't Solve It

Updated on April 3, 2020
Joshua Nightshade profile image

Joshua Is a self-proclaimed Driving God with an almighty Forza Game Rank.

Fiat-Chrysler Automobiles Issue

The FCA held a press conference on June 1st of 2018, revealing their future plans for the individual brands under the corporate umbrella. Some brands under the company finally got a bright light shined on their future while others got solid plans to continue brand profitability. However, other brands got no attention. And as a company, all the brands under your portfolio should be well planned out. Clearly, someone at the FCA did not get that message, as Chrysler, Dodge & Fiat weren’t well planned out, with Chrysler not even getting mentioned in the meeting at all. Brands like Maserati & Alfa Romeo definitely needed the attention they got, but more focus should’ve been given to the overlooked brands. And it's not like Alfa Romeo stuck to these plans. The FCA has a habit of not sticking to five-year plans, abandoning them early, rather laying the seeds for these brands' demise. It has been well-chronicled of the issues the FCA has with making a competitive vehicle and their lack of interest in developing some of the brands they own. Chrysler is currently at a point in time where you could make the argument Tesla has surpassed it as part of the American Big 3. Chrysler group or the FCA as its currently known, has always struggled to compete with competition from Ford and Chevrolet. But the more I researched, the more the problems run deep.

Chrysler is at a Crossroads

Firstly, however, it needs to be explained why Chrysler, as a brand specifically, is in the most trouble, having the direst straits of any brand in the FCA currently. And while I’m not going to overlook the 2008 economic crisis, Mercedes selling it to a bank, and Fiat ultimately acquiring it, I will start this in the modern age: Fall of 2014. Chrysler, as both a brand and a part of the FCA Corporation, has continuously had its struggles. The FCA struggles are vast, and while I'll cover them more in-depth in other articles, they all boil down to a lack of competitive vehicles, a lack of segment coverage, and constantly making promises that never really pan out. It reminds me of Infiniti but on a much larger scale. Chrysler, as a brand, tried to become a luxury brand and ultimately failed. Then they tried to make Chrysler into a regular car brand with the introduction of the Chrysler 200, just so it could be discontinued two years later in 2016. It was never a viable contender to the Honda Accord or Toyota Camry. The Town & Country was also discontinued, replaced by the Pacifica in a questionable marketing decision. And don’t get me started on all the supposed five-year plans that got trashed. According to one, Chrysler was supposed to expand the lineup of three models – 300, 200 and the Pacifica, to six models by 2018 with the addition of a compact car, a midsize crossover and a full-size crossover.

"We are making Chrysler into a mainstream brand. The other domestics have walked away from being an American brand. We are American and can go head to head with the best. We’re ready to take on the world."

Those were the specific words of Al Gardner, chief executive of Chrysler at the time. For anyone doing the math, I’m writing this in 2020, there are no new vehicles and the Chrysler 200 is dead. So much for going head to head, they couldn’t even manage that. I think maybe that’s why Chrysler got no mention in the recent FCA 5-year plan. Maybe they took advice from the Cheat Codes: “Promise Me No Promises.”

Cloverleafs Don't Always Bring Luck

Alfa Romeo was one of the company’s fortunate enough to get a plan from the FCA during that meeting. However, it had a questionable marketing strategy going forward. Strictly thinking about the American market here, an LWB version of the Giulia and the Stelvio doesn’t make much sense. And the naming strategy for the new GTV sports car was bound to cause issues later. So it came as no surprise to me when Alfa became victim to cost-cutting, with the planned models never going to be put into production. It's a standard affair at Fiat-Chrysler Automobiles to kill something off without ever giving it a chance. And this is why the corporate brand isn't going anywhere.

So How Does The PSA Merger Help?

To which I answer this question with a question, does it help anything?

Let's make one thing absolutely clear. I'm not fully sold that it will lead to the betterment of the company.

As for what the PSA/FCA Merger is, it's quite simple to explain. The FCA has been looking for a partner to bail them out because their product sales have been lacking in quite a few areas where they really shouldn't be. And instead of trying to solve the situation themselves, they deemed that too hard of a challenge (this is America's third-largest auto manufacturer we are talking about) and tried to share the problem by merging with another company. After a General Motors merger was scoffed at and a merger with Renault was denied by Nissan, they finally found a partnership with the PSA. According to multiple sources, this merger is 50/50 split so everything should go smoothly, creating the fourth largest auto manufacturer in the world. The merger has benefits for both sides as well but for us enthusiasts, things may not go so smoothly.

The Pros & Cons of A PSA/FCA Merger

One of the biggest pros benefits the PSA, as merging with the FCA allows them to bring Peugeot back in the American market by their 2026 initial goal. It's also helpful to all brands, mostly the ones on the Fiat side of things, that need new innovative technology, EV & hybrid drivetrains and a foothold in Europe, something the FCA has really needed. The cons, this merger, to quote Car & Driver, is probably more about "stockholder value, future earnings, and potential for cost-saving synergies than about the product." What stands out there is cost-saving, which can quickly turn to cost-cutting. Alfa Romeo already fell victim to cost-cutting last year before the merger happened, with its plans for more models being squashed. The same can easily befall Maserati. And with PSA CEO Carlos Tavares at the helm, a man that is known for aggressive cost-cutting, don't be surprised if, on a larger scale, some brands get axed entirely. The PSA/FCA says they will retain all 13 brands but there is little to spare Fiat & Chrysler here in the U.S or Lancia and Vauxhall overseas in Europe. The future is uncertain and going by the past, I don't have much faith in it, even if the PSA is now involved.

© 2020 Joshua Nightshade


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