PSA Group CEO Carlos Tavares is seeking a deal that will expand the automaker's footprint outside of Europe, according to people familiar with the matter.
Tavares has met with advisers to consider potential collaborations or mergers, said the people, who asked not to be identified because the matter is private.
The deliberations are very preliminary and potential targets have not recently been approached, the people said. Fiat Chrysler Automobiles is attractive to PSA for its exposure to the U.S. and its premium Jeep brand, but Tavares also sees General Motors as a good fit and Jaguar Land Rover as a possibility, the people said, while cautioning that such deals would be difficult to reach.
Fiat Chrysler’s new CEO Mike Manley gave the clearest response to PSA’s overtures at the Geneva auto show on Tuesday, saying FCA would look at "any deal that would make Fiat stronger."
The offer was welcomed by Tavares. "We love to discuss with people who are looking for deals," he said in response to Manley’s comments.
Tavares said PSA is immediately focused on strategic initiatives such as bringing the Peugeot brand to North America and expanding Opel to Russia, but he added: "We want to be open and try to look for the best opportunities for our company."
Tavares' approach echoes the consolidation once championed by the late Sergio Marchionne, architect of Fiat Chrysler Automobiles.
Gaining scale would help PSA spread surging development costs for electric and self-driving cars and brace for new competition from tech companies such as Uber Technologies and Alphabet’s Waymo that are muscling their way into the industry.
JLR owner Tata Motors declined to comment. A GM spokesman did not immediately respond to a request for comment.
A spokesman for PSA declined to comment on any specific plans. He referred to Tavares' comments at a Feb. 26 earnings press conference last week, when Tavares, asked about plans for about 9 billion euros ($10.2 billion) in net cash, said that strategic opportunities were "open for discussion" while cautioning the money would also help in a downturn.
"We think we are in a good position both in terms of running the operations and also in terms of strategic vision" with regard to electrification, autonomous driving and mobility, Tavares said on the call. "We have done our homework, and we think we are on the right path."
Automakers are under intense pressure to combine efforts on the slowing market for combustion-driven vehicles, to save cash for expensive new technologies like electrification, autonomous driving and app-based services. With more signs that sales volume has peaked, Ford and Volkswagen Group are working toward a broad partnership that would include commercial vehicles and autonomous driving, while BMW and Daimler are collaborating on a range of shared- and self-driving efforts.
Tavares, who in five years at the helm has turned around the flagship Peugeot brand and GM castoff Opel, still relies on Europe for more than 80 percent of PSA’s unit sales. A U.S. partner would potentially further Tavares' plan, announced last week, to bring the Peugeot brand back to North America. The company, which makes the 308 compact and 3008 SUV, plans to ship vehicles in from Europe or China from 2026. An alliance could pave the way for local production without a prohibitive investment.
A deal would also help PSA build scale. The French company sold 3.9 million cars last year, enough to qualify as a volume producer but nowhere near the 10 million-plus that VW, Toyota and the Renault-Nissan-Mitsubishi alliance churned out, giving them added leverage to squeeze out costs.
Fiat, GM, JLR
Fiat Chrysler is focused on steadying the management team and operations since Marchionne passed away in July, the people said. It has not held any recent discussions with PSA regarding a combination, they said. Fiat and Peugeot extended their van cooperation to include vehicles under the French company's Opel and Vauxhall brands in February.
GM has little interest in the European market, two of the people said. Under CEO Mary Barra, the U.S. automaker has been shedding low-margin businesses and investing in self-drive technology and mobility services instead. Merging with or acquiring PSA would be a complete reversal -- and is something GM could have pursued when it sold Opel to the French company two years ago, said one of the people.
Despite the obstacles, analysts have started to speculate on options for PSA. At J.P. Morgan Securities, analysts including Jose Asumendi suggest a European passenger-car partnership with Ford or a cooperation deal with JLR as potential solutions. Jefferies International Ltd. analyst Philippe Houchois, in a note on Monday, also suggested JLR as a possibility.
Bloomberg News reported last week that Tata is exploring options for JLR -- including the sale of a minority stake in the struggling British automaker. The U.S. is its biggest market, while China, which has slumped recently, is still among its largest. Both the Jaguar sports car and luxury Land Rover nameplates would bring PSA the cachet it's seeking to layer over its efficient production platform, where Tavares has lowered costs, and has made plans for electric cars.
Tata said last week that there was "no truth to rumors that Tata Motors is looking to divest its stake in JLR," while declining to elaborate.