In January 2021, the world’s number 8 and number 9 carmakers in terms of production merged into the Stellantis concern. With its joint production it will overtake General Motors and nip at the heels of the 3rd largest carmaker, the Renault-Nissan-Mitsubishi alliance, which holds the lead mainly in the area of electromobility. What will the combination of FCA and PSA bring? And will all of its 15 brands survive?

What will you find in the Stellantis porfolio?

A relatively wide range of car brands can be found in the Stellantis Group portfolio. The Italian classics Alfa Romeo, Maserati, the fading Lancia and the sports version of Fiat – Abarth are the luxury brands represented. The French are adding an emergency luxury offshoot of the Citroën DS, which is already beginning to bloom as an increasingly distinctive and independent product portfolio, similarly to Genesis and Hyundai.

Mainstream brands are also represented here – American classics like Chrysler, Dodge, its spin-off and now iconic RAM brand, and also Jeep, which was the only one that managed to gain a foothold in Europe. From originally German-British-Australian origin, we have Opel and Vauxhaul, from Italy we have Fiat, while the French add Peugeot and Citroën. Similarly to how American carmakers have struggled to gain a foothold in Europe, European carmakers have trouble breaking into the US and Canadian markets. But the same does not apply for the rest of American continent.

Commercial vehicles are also included. Peugeot, Citroën, as well as the Italian Fiat Professional have producing them for decades. The latter, thanks to cooperation with FCA, has been supplying vehicles to the American market under the Ram Trucks brand.

Finally, the latest piece of the puzzle is Mopar, originally a division of Chrysler, which provides spare parts, service, and customer care for Chrysler’s portfolio brands – Chrysler, Dodge, Jeep, Ram Trucks, and formerly Plymouth, Imperial, and DeSoto. Mopar will occasionally offer special editions of these brands, most recently the 2017 Mopar Dodge Challenger.

Savings and synergies

The merger of FCA and PSA into a single group, Stellantis, will bring what every merger should bring – savings and synergies. The expected savings is already known in advance even though all factories will remain open and at current production. Stellantis is expected to save 6 billion dollars a year. From where will Stellantis realize these savings?

First and foremost, sharing modular platforms and drivetrains, as the VW Group has been doing very successfully for many years. The problem is that the North American and European requirements for NOx and CO2 emissions are not exactly compatible. This is especially the case for a number of Japanese carmakers, especially in Europe, and several European carmakers in the US. However, even if we omit the very complicated scenarios, the upside for Fiat and PSA in Europe will be significant.

Sharing the costs of developing electric cars and hybrids, including batteries, charging stations, environmentally friendly disposal, etc., is an extremely important point. As Renault-Nissan-Mitsubishi has shown, you must have scale for electromobility to work. Although Tesla has long been the synonym for electric cars, it does not make much money on them. The Franco-Japanese alliance is doing better. It manages to hold the number one position in sales of electric cars while maintaining profitability.  

Savings in marketing and sales can also be expected. If Stellantis takes the VW route, as Mopar or Chrysler in the US did, and not the approach of Hyundai/Kia and earlier PSA, then it can very easily happen that joint multi-brand dealerships and service centers will appear.  Moreover, as brands begin to share more key components, it’s a logical approach. For dealers and service provides, however, this will often mean the need to purchase new CRM systems that can handle more brands and share data across different company applications, marketing, and DMS. Automotive CRM from Konica Minolta is such as system, which also offers a 360° customer view across brands.

How to deal with brand cannibalization

Stellantis, unlike VW, has very elegantly stratified its portfolio of passenger car brands. Just like Chrysler, by itself, has gone the way of model diversification and individual specialized brands with Jeep, Ram Trucks, and Dodge offering distinct products. Fiat was also able to elegantly differentiate with Fiat, Lancia, Alfa Romeo, and Maserati offering little overlap between the brands. PSA was worse in this respect, but Citroën and Peugeot were able to differentiate in design and some of the specialties that Citroën kept for themselves. PSA as well as Opel/Vauxhall were then able to target a completely different market segment than Fiat and their brands.

The only areas time when it gets a bit muddy for FCA and PSA, more precisely for Fiat and PSA, is in commercial vehicles. But here they can take advantage of economies of scales. This may be particularly useful to Stellantis in the situation where the main rival of PSA, Renault, is toying with the idea of extending cooperation with Daimler in the area of commercial vehicles.

Overall, however, Stallantis has a great chance of avoiding the problems facing VW, where, for example, the Volkswagen Passat and Škoda Superb are fighting for de facto identical customers, while both brands are also pulling customers away from the sister Audi A4. Nevertheless, it is likely that Stellantis’ product porfolio will narrow. After all, the number of new models from Lancia, Alfa Romeo, Abarth or Fiat is not too large.

Strengthening in Americas and Europe, expansion in Asia and Africa

However, the Stellantis group does not plan to only save. On the contrary, it wants to jointly attack markets where it is not yet doing well. Namely Asia (mainly China and the Middle East) and Africa.  Already the current product portfolio has something to offer for all three of these regions. For the Middle East, for example, Ram Trucks and Jeep are not in a bad position at all. The potential multi-brand dealerships will be able to choose the brands best suited for each region.

It is thus possible that in Africa or the Middle East, we may see Stellantis dealerships exclusively for 4x4s – from the cheapest Peugeot, Citroën and Opel cars, through utility Ram Trucks, more off-road oriented Jeeps, and luxury SUVs from DS, Maserati, or Alfa Romeo. It is also worth noting that Stellantis plays a relevant role in the minivan/MPV category, which are still sought after in Asia. There, the combination of large American MPVs from Chrysler and Dodge with smaller European MPVs from Citroën, Peugeot or Opel could be a big hit. Let’s let them surprise us.