Fiat Chrysler merger with PSA appears headed for approval

In this March 1, 2018 photo, the logo of Peugeot is displayed at PSA Peugeot Citroen headquarters during the presentation of the company's 2017 full year results, in Rueil-Malmaison, west of Paris, France.

The Tribune spoke Thursday with Carla Bailo, the president and CEO of the Ann Arbor-based Center for Automotive Research, about what a Fiat Chrysler merger with PSA Peugeot could mean for local plants and workers.

Bailo acknowledged the uncertainty of possible outcomes as the companies navigate the nascent stages of the agreed-upon merger, but said local workers should not expect notable day-to-day impact on their jobs in the coming years.

“When we look at the reasons for the merger, PSA needs to have an American partner. PSA has every intention of coming into the U.S. market. Also, from a portfolio standpoint, their products, at least if you look at PSA compared to old Chrysler, meaning Chrysler-Jeep products, there is no cannibalization really,” she said.

Fiat Chrysler’s strongest brands are Jeep SUVs and Ram trucks and it is focusing on relaunching its premium and luxury brands, Alfa Romeo and Maserati, with a focus on hybrid engines. It still makes smaller cars under the Fiat marquee, mostly for the European and Latin American markets.

PSA Peugeot makes mostly small, city-friendly cars, family sedans and SUVs under the nameplates of Peugeot, Citroen and Germany-based Opel, which it bought in 2017. That is where the companies can expect to have the most overlap.

Meanwhile, PSA brings “a lot of capability in electrification,” said Bailo. “That’s one thing that they can bring to the party and help with [Fiat Chrysler].”

Locally, however, she doesn’t expect the merger to have an immediate impact on Fiat Chrysler’s operations.

“What I’m seeing in Indiana is mainly transmission-related or powertrain-related products, and most of those are being made for the RAM and for the Jeep platforms,” remarked Bailo.

“Considering that PSA doesn’t even touch that market, I don’t foretell any huge concerns or issues for those plants. They don’t even make a transmission of that size that can handle a product like that.”

She acknowledged there could be some “commonization” or expansion of platforms if PSA decides to move into similar segments of the auto industry. Such a move, however, is not expected to be a risk for manufacturing plants.

What is worth keeping an eye on is the speed with which the companies move toward electrification.

“For big products like the Ram and others is going to be several, several years. Then at that point we’ll see what happens with transmission manufacturing plants in general, because full [electric vehicles] don’t need them,” said Bailo. “But that’s quite a few years down the road.”

In general, said Bailo, the move should bring optimism to places like Kokomo.

“Looking at the economies of scale it will bring, the increase it will bring in terms of development dollars to be able to produce and manufacture those high-technology products the customer wants – anything that helps the product is going to help the people that manufacture that product,” she said.

“I think it’s a positive for both parties involved in this, and it should benefit everyone at the end of the day by reducing the cost, which will help with profitability.”

The Center for Automotive Research is an independent nonprofit that researches, analyzes and provides commentary on the automotive industry.

The Associated Press contributed to this report. George Myers can be reached at 765-454-8585, by email at george.myers@kokomotribune.com or on Twitter @gmyerskt.

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