PARIS -- A tie-up with Fiat Chrysler would benefit PSA Group in three obvious ways: increased scale in Europe, access to the huge U.S. auto market, and financial muscle to increase investments in electrification and autonomous driving.
PSA CEO Carlos Tavares, if he is chosen to lead the combined company, would probably pull out his battle-tested turnaround playbook. His formula of lowering production costs, increasing pricing and simplifying model lineups worked in 2014 at PSA and again in 2017 at Opel/Vauxhall.
Adding Fiat Chrysler's approximately 1 million annual European sales would give PSA annual volume on the continent of more than 4 million vehicles and a market share of nearly 24 percent, making it easier to recoup investments in product development, capital expenditures and r&d.
Tavares has most likely gamed out how PSA's new lightweight and multifuel CMP and EMP2 platforms could transform Fiat's aging and uncompetitive (except for the venerable 500) lineup in Europe.
PSA left the North American market in the early 1990s, having never really made an impact with either the Peugeot or Citroen brands. Tavares -- who was once president of Nissan North America -- has set 2026 as a deadline to return to selling Peugeots in the U.S., but the hazy tariff picture has led him to hedge his promises. Fiat Chrysler's 2,500-plus dealer network could be an avenue to sell Peugeots; or just having access to healthy profits from Jeep, Ram, Chrysler and Dodge could be enough exposure.
PSA Group has lagged a bit on developing self-driving cars, as Tavares has worked to shore up the company's balance sheet since taking over in 2014. And while PSA is in good shape to meet 2021 EU emissions standards, coming targets in 2025 and 2030 will require mass electrification.