Another milestone in the tumultuous history of the company originally known as just Chrysler: On Saturday, Fiat Chrysler Automobiles and PSA Group will merge to create Stellantis, the fourth-largest automaker in the world by volume. Stellantis will be listed on the New York, Milan, and Paris stock exchanges next week. There will be repercussions. Stellantis […]
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Another milestone in the tumultuous history of the company originally known as just Chrysler: On Saturday, Fiat Chrysler Automobiles and PSA Group will merge to create Stellantis, the fourth-largest automaker in the world by volume. Stellantis will be listed on the New York, Milan, and Paris stock exchanges next week.
There will be repercussions. Stellantis will start life with seven FCA brands and another four from PSA. That seems unmanageable. Every merger creates duplication and results in the death of products, brands, positions, plants, and plans. PSA Group CEO Carlos Tavares, who becomes CEO of Stellantis, has a history of turning brands and companies around with tough cost targets and the discipline to axe where necessary.
On the FCA side, Jeep and Ram are the profitable powerhouses and, quite frankly, the reason the automaker was an attractive dance partner in the first place. Jeep will only grow in stature with a greater international presence. Ram will remain mostly centered on the North American market but could increase its market reach, especially with commercial vehicles. FCA CEO Mike Manley will oversee the Americas for Stellantis and will be a champion for these brands.
It is the oldest, truly heritage, brands, that are most vulnerable: Chrysler and Dodge. Chrysler sold just over 110,000 vehicles in the U.S., its biggest market, in 2020. It is a brand that now only consists of the Chrysler Pacifica minivan and the aging Chrysler 300 fullsize sedan.
Dodge is healthier with about 267,000 sales in the U.S. last year, but with the discontinuation of the Journey crossover and the Grand Caravan minivan, it is reduced to the Dodge Durango SUV and the Dodge Charger and Dodge Challenger muscle cars.
Then there are the Italian brands: Alfa Romeo, Fiat, and Maserati that have failed to meet lofty expectations in North America. Fiat’s dismal sales resulting in the discontinuation of the Fiat 500, 500L and 124 roadster, leaving only the Fiat 500X small crossover.
The PSA Group brings Peugeot, Citroen, DS Autos, and Opel which the group bought from General Motors in 2017.
Before the creation of Stellantis, there were plans to sell a PSA Group brand in the U.S. by 2026 and Tavares later identified the brand as Peugeot. A small group of executives have been in place in the U.S. to oversee the return of the brand that left North America in 1991. Peugeot CEO Jean-Philippe Imparato now says plans to re-enter the U.S. by 2026 may be reconsidered, according to an Automotive News Europe report.
Chrysler dates back to 1925, founded by Walter Chrysler, and it is still referred to as part of the Big Three or Detroit Three, referring to General Motors, Ford, and Chrysler.
The automaker has teetered many times on the edge of a financial cliff. It was on the verge of bankruptcy in the late 1970s and was saved by government loan guarantees worth $1.5 billion that bought time until the release of a surprising savior in secret development: the minivan.
In 1998, in a deal worth $36 billion, Chrysler was acquired by Daimler-Benz of Germany, and the so-called alliance or “merger of equals” was named DaimlerChrysler. It was not a good fit, as the two cultures never really merged—though Daimler-sourced platforms helped make vehicles like the Chrysler 300C, Dodge Charger and Challenger, and Jeep Grand Cherokee much better than their predecessors. Daimler sold Chrysler in 2007 to Cerberus, a private equity firm in the U.S., for just $7.4 billion.
The financial crisis in 2008 proved devastating for Detroit automakers. Chrysler laid off thousands of white-collar workers. Plant closures, shift eliminations, job cuts, and model line rationalizations were all planned. Work on future products was mostly curtailed. The few remaining resources were diverted to development of the next-generation Chrysler 300 full-size sedan and the new Jeep Cherokee.
On April 30, 2009, Chrysler filed for bankruptcy. General Motors filed for bankruptcy June 1, and while the government deemed GM too big to fail, officials were divided as to whether to use government money to save the smaller Chrysler.
In the end, government loans totaling more than $10 billion were provided, and when Chrysler exited bankruptcy, it had a patchwork of owners including the U.S. and Canadian governments, the United Auto Workers pension fund, and Fiat S.p.A. which agreed to supply some of its powertrains and other tech, and also share its CEO, Sergio Marchionne.
By 2014, Fiat had acquired 100 percent of Chrysler, which became a full subsidiary of the Italian automaker. Fiat Chrysler Automobiles was formed; Marchionne remained CEO of the cross-Atlantic empire until he died in 2018.
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