Yesterday, Fiat Chrysler Automobiles and Groupe PSA officially merged to become Stellantis, the fourth-largest automaker in the world. But this merge has produced some consequences that need to be addressed. One of those being Peugeot's re-entry back in to the U.S.
“We were last speaking about [Peugeot’s U.S. re-entry] a year and a half ago, before Stellantis. We can’t not take into account that in the coming days Peugeot will be part of this new world. I imagine in the coming months due to the new strategy we will have to adapt and reconsider all elements, including this one,” said Peugeot CEO Jean-Philippe Imparato to Automotive News.
A key reason for this reconsideration not wanting overlap brands in the U.S.
This is a polar opposite to comments made last year by Larry Dominique, CEO of PSA North America.
Imparto's focus for Peugeot in the near future is concentrating on its core markets - Europe, the Middle East, Africa, and Latin America. There are also plans to get the brand back on track in China. As for the U.S., Imparto said it was "still on the table" down the road.
Source: Automotive News (Subscription Required)
It has been some time since we last reported on PSA Group's plan to re-enter the U.S. When we last checked in, Peugeot was chosen as the brand to be entering the U.S. by 2023 and rumors were swirling about a possible merger between PSA Group and FCA. A lot has changed since then as the two automakers begin to finalize plans for a merger, and the COVID-19 pandemic has no end in sight in the U.S. What does that mean for Peugeot's return to the U.S.?
"My role is to grow the PSA business in North America, growing our mobility capability and preparing for the launch of Peugeot." said Larry Dominique, CEO of PSA North America to Automotive News.
"From our standpoint, we're planning as if [the merger] doesn't exist. We're marching forward as if PSA was going to be there by themselves."
Dominique is right now focused on the present with the top priority being building out a dealer network for both U.S. and Canada before the launch. He explained that the company is planning a two-prong approach, having franchised dealers and online retailing.
"The future success for OEMs is the reduction of distribution costs while ensuring both retail and OEM margin sustainability. This has to be done through strong pricing power, not volume turnover," he said.
Part of this is due to COVID-19 pandemic which has many automakers rethinking how they sell vehicles, something Dominique admits is a big challenge.
"All my competitors are going to be focusing on digital, which means we have to step up our game and deliver an even stronger customer experience when we launch Peugeot in North America. We need to get out of an environment where the retailers are dependent upon just F&I and service to pay their bills."
Another challenge facing Dominique, what models to sell in the U.S. The market has changed a lot since PSA Group announced its intentions to re-enter the U.S. Consumers now are focused on trucks and crossovers.
"I don't have a full-sized truck,. But the C and D segments are what's relevant to us. The C and D segments are high volume and important to North America. That's where we're going to focus initially,"
To us, this hints at the 3008 and 5008 crossovers being some of the first models to be available.
Source: Automotive News (Subscription Required)
PSA CEO Carlos Tavares said on the BFM Business radio station none of the brands would be let go after the merger of PSA and FCA is complete. He said it will be a challenge to manage all of the brands to cover the market, but that he sees "that all these brands, without exception, have one thing in common: they have a fabulous history."
While acknowledging that the combined companies would have a significant number of brands, it would still be lower than the number Volkswagen manages.
The combined companies would field Peugeot, Citroën, DS, Fiat, Opel, Vauxhall, Fiat, Chrysler, Dodge, Jeep, Ram, Alfa-Romeo, Maserati, and Lancia.
Both companies will aim for efficiencies of scale and are are willing to make concessions to the European Union in order to get the okay to merge.
PSA Group is starting to sound a bit desperate for a merger these days. First they bought GM's Opel Unit for $1.54b, later demanding a roughly 50% refund due to issues stemming from extra rosy sales forecasts and emissions regulations trouble. PSA has quickly turned around the Opel unit into a profit center instead of the loss-maker it was under GM control.
More recently, Peugeot was seen to be dancing with FCA only to be rebuffed when it came to light that any merger between the two companies would come in the form of PSA stock.
Now PSA Group CEO Carlos Tavares says that he would be interested in a merger with Jaguar Land Rover, saying he would be interested in having a more premium brand above their current DS line.
Jaguar Land Rover is struggling with sales declines, but parent company Tata has said "There is no truth to the rumor that Tata Motors is looking to divest its stake in JLR".
So it is back to the dance floor for PSA without a partner. Lets see who they come up with next.
We previously had reported that Peugeot was planning on returning to the U.S. by 2026. After having been turned down by FCA for an offer of a merger, The Wall Street Journal is reporting that Peugeot is accelerating its plans for a US return to happen in 3 to 4 years, that means as soon as 2022.
One advantage they have is their recent acquisition of Opel from General Motors. Through that acquisition, Peugeot gained a number of engineers who have experience designing vehicles for the U.S. market. According to PSA CEO Carlos Tavares, anything Peugeot currently builds is up for consideration to bring to the US market, though it has been hinted that the initial offering will be in the mid-size and compact segments.
Peugeot is also looking to disrupt the sales process as well. While they still may use a dealership network, executives appear focused on a new method of vehicle delivery, perhaps using a methodology similar to Carvana where the process is primarily completed online.
... rumors are rumbling about a possible PSA / FCA merger.
The heads of FCA and PSA separately stated to journalists at the Geneva auto show that their respective companies remain open to the idea of partnering or merging with another company, though neither named which potential suitor that could be.
Robert Peugeot, who's family owns around 14% of PSA group said, "We supported the [Opel acquisition] from the start,” he told Les Echo in an interview held Monday. “If another opportunity comes up, we will not be braking, [PSA Group CEO Carlos Taveres] knows that."
Meanwhile another potential partner could be Jaguar Land Rover.
Merging with either company would give PSA better access to the US Market, something Peugeot is already planning on doing by 2026.
For FCA, the benefits would be a more global partner and access to technology that would help meet Europe's strict emissions regulations. On the flip side, it would mean 3 additional brands on top of the 7 that FCA already has.
PSA has been mulling a return to the United states since at least 2014. We reported in March of 2016 that DS was the most likely brand to mark the return of the French automaker to these shores. Now, PSA has made the announcement that Peugeot has been the brand selected, beating out Citroën, DS, and the recently acquired Opel brand.
Peugeot left the U.S. market in 1991 after selling only 4,292 vehicles the year prior.
PSA will start in 15 U.S. states and 4 Canadian provinces that have a higher rate of import vehicle sales.
The vehicles would be sourced from both Europe and China.
No firm time frame has been announced for the arrival of Peugeot in the U.S., the company only states that it wants to have its vehicles here by 2026.
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