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Stellantis: Scale Creates Opportunity

19 January 2021 Ian Fletcher Stephanie Brinley, MBA

FCA and PSA announced plans to explore a merger in October 2019, with the deal closing on 16 January. A new company called Stellantis has been created, with stock traded on the Milan, Paris and New York Stock Exchanges. In this summary, IHS Markit provides context for some opportunities and challenges the new company will face. The commentary provides a combination of announced and expected actions and was developed by principal analysts Stephanie Brinley and Ian Fletcher.


Stellantis, the newly created automaker born from a merger between PSA and FCA, is positioning itself as "Stellantis, A World Leader in Sustainable Mobility." The new company, with the stroke of a pen, became an automaker with more than 8 million units per year in annual sales and production volume in 2019. The new company is 400,000 employees and the fourth-largest global automaker.

On the global stage, Stellantis is now behind Volkswagen, Toyota and the Renault-Nissan-Mitsubishi Alliance, based on 2019 figures (the latest for which we have global actual data). Separately, FCA was the eighth largest automaker by sales volume and Group PSA the ninth. While Stellantis has several brand stables with electrified and electric powertrain offerings, the company will have some way to go to catch up to other automakers more firmly positioned along the sustainable mobility path. However, the shift to electrified platforms, and more specifically electric vehicles, is in early stages. Stellantis, with development resources and time, has the ability to become more significant in this arena.

Massive brand stable may see some paring

Stellantis now has 14 brands in its combined PSA-FCA stable. While so far indicating that no plants are expected to be closed, Stellantis CEO Carlos Tavares has demonstrated in the past a willingness to abandon products that are unprofitable and Stellantis has more production capacity than it may need today. However, the expected cost-cutting targets enabled by the larger scale and improved purchasing power of the combination may ultimately mean that answer may not always simply be to drop troubled brands or products—instead there may be opportunity for some brands to see expanded product portfolios compared with today as a result of improved purchasing opportunities and scale effect. Even so, there are products and brands which may be at risk under the new organization. The level of risk will become more clear as Stellantis moves forward.

Managing this large of a stable of brands can be difficult, though Volkswagen has successfully supported a vast number of brands, too, showing it is not necessarily impossible. In Stellantis' favour, many of the brands are functionally regional and do not need to share center stage equally in all markets. Also in Stellantis's favor is the ability that FCA employees bring to be able to maintain clear product DNA for key brands under multiple owners in the past. The mix of brands also means that the Stellantis product portfolio touches nearly every vehicle segment, creating opportunity to address more customer needs.

Combined company to achieve sales, production over 8.0 million units by 2025

Based on the IHS Markit December 2020 sales and production forecasts, the combined sales of FCA and PSA will reach 7.0 million units in 2021 and increase to 8.25 million units as soon as 2025. This volume provides the scale Stellantis will need to achieve its targets and to enable development and innovation in any number of automotive industry arenas. The scale has potential not only to enable Stellantis to catch up to other automakers who may be ahead in one area or another, but also to the potential to deliver innovations that will move Stellantis beyond the issues facing the industry over the next five years.

Based on the most recent sales forecast, the former FCA brands will account for nearly 58% of volume in 2025. The top brands for Stellantis will be Fiat and Jeep, followed by Peugeot and Citroën. Ram's full-size pick-up trucks in North America are expected to continue to be highly profitable models. Ram will be fifth in the list of brands in 2025, with volume forecast to approach 920,000 units--but will have a disproportionate influence on the company's revenues.

In 2025, IHS Markit forecasts that Stellantis' largest region will be Europe, with North America second in volume but potentially providing more or similar revenue. Sales in mainland China are forecast to continue to be relatively weak for Stellantis; after poor performances by both FCA and PSA in China over the past decade, it will take a significant amount of time for fortunes there to be reversed. IHS Markit forecasts that mainland China, Hong Kong SAR and Taiwan will provide only about 3% of Stellantis' global sales in 2025.

IHS Markit forecasts Stellantis' production footprint will follow a similar path to its sales footprint in terms of regions, as particularly in the short term as it will take time to execute platform and production synergies. In 2025, IHS Markit forecasts the combination's global production will reach 8.40 million units in 2025; nearly 55% of that is forecast to take place in Europe and almost 27% in North America. Although products currently on FCA platforms in Europe are most likely to shift to shared platforms based on PSA architectures, the PSA range currently has little to support North American demands. Products like the Ram pick-up and Chrysler minivan are likely to remain North America-specific. Production in South America is forecast to increase with the combined brands. In 2019, FCA and PSA independently produced about 619,500 units in South America, most of that FCA as two of its largest manufacturing facilities are in Brazil. In 2025, this is forecast to increase to about 962,000 units.

Platform sharing: FCA brands expected to take advantage of legacy PSA platforms

IHS Markit expects the creation of the Stellantis to lead to a product development programme that will lead to former FCA designated products moving over to PSA-developed CMP and EMP2 architectures which offer a wide array of electrification options. By 2025, we anticipate that 15 light vehicle nameplates will move on to this pair from brands like Alfa Romeo, Fiat and Jeep which will be sold across the world. This will also lead to vehicles based upon these platforms making up almost 60% of Stellantis' overall volumes by 2025, of which over 37% of vehicles based upon these architectures will be former FCA brands by this point.

Peugeot brand's US return less likely

Peugeot had also targeted the North American market, and specifically the US; Tavares has been quoted several times as saying that Groupe PSA could not truly be a global company without a presence in the US. However, Stellantis now has a strong presence in the US and North America, with products already suited to the region. In addition, the Jeep brand has plans to expand to mobility services beyond traditional vehicle ownership, which was the path to entering the US market that Peugeot was working toward. With the pressure off to add Peugeot to the US market, the work done so far relative to establishing an alternative to current ownership models could potentially be made available to the brands already within the US, over time, rather than maintaining efforts to revive Peugeot in the US. Comments during a presentation on the merger and from CEO Tavares during a media briefing support this expectation.

Posted 19 January 2021 by Ian Fletcher, Principal Analyst - AutoIntelligence, Automotive, IHS Markit and

Stephanie Brinley, Principal Automotive Analyst, S&P Global Mobility

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