PARIS — The PSA-FCA merger, if it comes to pass, may not have much of an immediate impact in the U.S., but it would quickly shake up the European auto market, creating a credible No. 2 to challenge the longtime dominance of Volkswagen Group.
It could also bring clarity about the future of three of Europe's most storied brands: Fiat, which is struggling with an aging lineup to hold market share outside Italy; Maserati, awaiting a promised reboot; and Alfa Romeo, whose new Giulia and Stelvio models have not brought the revival projected by Fiat Chrysler Automobiles' late CEO Sergio Marchionne.
PSA technology could provide an avenue for FCA to meet Europe's increasingly tough carbon dioxide emission standards and potentially avoid billions in fines — penalties the automaker is staving off for now by paying Tesla more than €600 million ($670 million) a year in a pooling arrangement.
PSA CEO Carlos Tavares has said he was dismayed to find that Opel was so far from its emissions targets when it was acquired from General Motors, but PSA quickly closed the gap by moving Opels to its own platforms and powertrains, including new electric and plug-in hybrids. According to JATO Dynamics, last year FCA was 35 grams per kilometer over its 2021 target of 95 g/km, and a similar strategy could work once the Tesla arrangement expires.
And, not least of all, the two companies will be able to combine r&d spending to meet the huge financial challenges of mass electrification and autonomous driving.
"The focus will be on Europe, where sub-scale product lines, powertrains and EV investments could be combined," Bernstein analyst Max Warburton said in a note to investors. "Products and brands might be rationalized and distribution networks combined."
In the first nine months of 2019, Volkswagen Group sold 2.86 million passenger vehicles in Europe and had a 24 percent share, mostly through its four big brands Volkswagen, Audi, Skoda and Seat, according to figures from industry group ACEA. And it covers the luxury and exotic segments, too, with Porsche, Lamborghini and Bentley. With those volumes, VW can amortize technology, drive hard bargains with its supply chain and even influence pricing and incentive offers from other automakers.
A fused PSA-FCA would have been fewer than 100,000 vehicle sales behind VW in Europe through September. And while weaker in the high-margin premium market, it would take the fight to VW in the SUV segments, the only remaining growth area in Europe, and in subcompacts, still Europe's largest market.