October 30, 2019 / 9:29 PM / a month ago

PSA could help Fiat Chrysler modernize its vehicle platforms

(Reuters) - A proposed merger between France’s Groupe PSA (PEUP.PA) and Fiat Chrysler Automobiles (FCHA.MI) would give FCA access to Peugeot’s more modern and flexible vehicle architectures, potentially enabling the combined companies to achieve lower costs through higher production volumes, a global auto analyst said on Wednesday.

FILE PHOTO: Logos of Peugeot and Fiat are seen in this illustration picture taken October 30, 2019. REUTERS/Regis Duvignau/Illustration

But the process of integrating platforms, powertrains and other components between the two automakers could take four years or longer, according to Sam Fiorani, head of global vehicle forecasting at AutoForecast Solutions.

The supervisory boards of both companies on Wednesday agreed to pursue the $50 billion merger, sources familiar with the matter said, moving the companies closer to a deal that could transform the global auto industry.

PSA would likely get little use out of FCA’s larger truck and sport utility vehicle (SUV) platforms - the ones that underpin the big Ram 1500 pickup, the Jeep Wrangler and the Jeep Grand Cherokee, he said.

While those platforms have been heavily revised or replaced in recent years, the vehicles built on them, which generate substantial profit for FCA, are primarily for the North American market, with limited appeal in Europe and other overseas markets.

“I don’t see the likelihood of a Ram pickup being sold with a Peugeot badge - anywhere,” Fiorani said.

There are numerous precedents for platform consolidation between two large multinational auto companies, the most recent being an agreement between Ford Motor Co (F.N) and Volkswagen AG (VOWG_p.DE) to share VW’s MEB electric vehicle architecture.

But PSA also has had recent experience in such consolidation, stemming from its 2017 acquisition of General Motors Co’s (GM.N) European brands Opel and Vauxhall. The French automaker previously had planned to jointly develop common small car platforms in Europe with GM. But since the Opel/Vauxhall acquisition, PSA has begun the process of shifting the former GM models to its own platforms.

Under CEO and Chairman Carlos Tavares, PSA has accelerated plans to modernize and simplify its vehicle architectures, with most of its future cars, crossovers and compact vans to be built on just two platforms, Fiorani said.

The company’s Efficient Modular Platform, or EMP, was introduced in 2013, and eventually will underpin a wide range of vehicles under PSA’s five brands (Peugeot, Citroen, DS, Opel, Vauxhall).

A newer, smaller architecture called Common Modular Platform (CMP) was launched earlier this year and is expected to provide the base for subcompact models ranging from the Peugeot 208 to the Opel Mokka.

FCA’s main car platforms, used primarily for crossovers in North America, are considerably older. The larger platform, called CUSW (for Compact US Wide), underpins the Jeep Cherokee and was first used for the Alfa Romeo Giulietta in 2010.

The smaller platform, called SUSW (for Small US Wide), is the base for the European-built Jeep Renegade and ProMaster City in North America and underpins a wide range of Fiat models in Europe, including the 500L and 500X. Elements of the platform date back to 2005, when Fiat and GM jointly developed a common small-car platform for their European models.

Fiat Chrysler has an existing joint venture in Europe with PSA called Sevel that builds large commercial vehicles for both companies. The big Ram ProMaster van that is sold in the United States is a version of the Fiat Ducato. Companion models include the Peugeot Boxer and Citroen Jumper.

Reporting by Paul Lienert in Detroit; Additional reporting by Edward Taylor in Frankfurt; Editing by Matthew Lewis

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