DETROIT — Fiat Chrysler Automobiles and PSA Group know how to rebound from adversity.
Fiat, then led by Sergio Marchionne, swooped in to take over a reeling Chrysler in 2009 and shepherded the company back to stability behind its Ram and Jeep brands. PSA, on the other hand, has undergone a turnaround in recent years under the guidance of Carlos Tavares, who became CEO in 2014 and put together a recovery plan that included eliminating unprofitable sales channels and trimming manufacturing costs per vehicle.
Both companies know how to overcome obstacles on their own, but they will be stronger confronting future challenges together, said Tavares, the Automotive News 2019 Industry Leader of the Year.
"We recognize that these two companies have faced very difficult moments in the past, that both companies were able to turn around themselves, and this is to the merit of the employees and the management of those companies," Tavares told Automotive News last week. "Both companies now have the maturity to conclude that it is best to be together to face the challenges of the future than to face those challenges alone."
A potential tie-up of the two automakers falls in line with the vision of the late Marchionne, who was vocal about the need for industry consolidation. Tavares said Marchionne was right "and is even more right today because of the huge challenges that we have in new technologies in CO2-related regulations, in connectivity and autonomous cars."
"All of this represents a significant r&d expense," he said. "It represents also a very strong challenge in terms of development."
Marchionne's shadow looms over another roadblock in front of FCA as the merger talks progress. General Motors filed a racketeering lawsuit against FCA and three former executives on Nov. 20 alleging Marchionne wanted to force a merger by hurting GM.
GM rejected Marchionne's overtures in the spring of 2015, and the suit alleges that he bribed UAW officials to accept a contract designed, "through the power of pattern bargaining, to cost GM billions."
FCA accused GM of trying to disrupt its UAW contract talks and the PSA merger. Tavares said his company was still moving forward in its talks with FCA.
"FCA has made a very clear statement saying it's meritless," Tavares said of the lawsuit.
"Of course, we are doing our own due diligence. So far, things are moving very smoothly."
He added: "It is not in our mindset to be somewhere destabilized by this kind of thing. We are doing our due diligence and, as we all know, the boards will have the final say."
Tavares said dealers should not be concerned and that one goal is to enhance both companies' brands, which are the "core of the engine of this merger."
"Our dealers should be very relaxed. Only good things will come of this merger," Tavares said. "We like cars. We like products. We like technology. We like brands, and we like history. So we'll project ourselves in the future based on the passion of our people and the passion of our dealers."