Carlos Tavares believes the merger of PSA and FCA to form the new Stellantis car group is a "shield for jobs." The Stellantis CEO spoke out against plant closures in his first press conference.
New car company Stellantis: CEO Carlos Tavares (left) and Chairman of the Board of Directors John Elkann (right).
Stellantis
The merger of Peugeot Société Anonyme (PSA) and Fiat Chrysler Automobiles (FCA) to form the new Stellantis auto group is expected to help preserve jobs, plants and the 14 brands as billions of dollars in annual savings are achieved. That's according to Carlos Tavares, who appeared before reporters for the first time in his role as CEO of Stellantis in a virtual press conference Tuesday.
Stellantis expects to leverage its size and economies of scale, targeting annual synergies of more than five billion euros after a start-up phase. This is to be achieved through intelligent purchasing and investment strategies, optimization of powertrain and platform utilization, application of state-of-the-art research and development methods, and efficiency in manufacturing. These synergy estimates do not foresee any plant closures resulting from the transaction. There will be no plant closures as a result of the merger, Tavares explained.
Merger to protect jobs
The merger creates a "shield for jobs," Tavares said. Factories could be better utilized, he said, and previously unprofitable models could be transformed into a meaningful business model due to economies of scale. The merger would allow for greater sales, greater efficiency and the introduction of new models due to lower costs through shared technology, he said.
However, he also noted that vehicles must be competitive in terms of price and quality, and if expenses become too high, profit margins will decline and other steps may have to be taken to reduce costs.
The current 14 brands – which range from Jeep SUVs to Fiat professional utility vehicles to luxury sedans from Maserati – would "represent a strong asset for the company," Tavares said. In some cases, he said, work still needs to be done to clarify brand identity. Synergies in production would be achieved through a system of "sister cars" that share platforms and components.
39 electrified vehicles by the end of 2021
Stellantis already has a strong presence in three regions - Europe, North America and Latin America - as well as "untapped potential" in markets such as China, Africa, the Middle East, Oceania and India. The company has plants in more than 30 countries. Stellantis is currently putting its China strategy to the test, Tavares said. Neither PSA nor FCA sells large numbers there so far.
While the electric mobility market continues to grow, Stellantis currently has 29 electrified models available and plans to introduce 10 more vehicles by the end of this year. Tavares also announced that all new models introduced by 2025 will have an electrified powertrain.
The merger of PSA and FCA was completed last Saturday, creating the world's fourth-largest automaker. The group has its financial headquarters in Amsterdam and employs 400,000 people worldwide. The new company went public this week on the Paris, Milan and New York stock exchanges.