AutoBeta(AutoBeta.net)11/05 Report--

New progress has been made in the merger of Peugeot-Citroen (PSA) and Fiat Chrysler (FCA), with future joint venture Stellantis planning to cut brands, models and factories in China and regain lost market share in China, according to foreign media reports.

According to previous reports, PSA and FCA announced on July 15 that the combined company, named "STELLANTIS", is expected to sell 8.7 million vehicles a year, making it the fourth largest automaker in the world after Volkswagen, Toyota and Renault-Nissan-Mitsubishi alliance.

PSA owns Peugeot, Citroen, DS, Opel and Vauxhall, while FCA owns Alfa Romeo and Chrysler. Dodge, Fiat, Jeep, Maserati and other brands. Philippe de Rovira, chief financial officer of PSA Group, said last week: "given the number of cars owned by the combined company, it is unreasonable for Stellantis to continue to operate so many brands, platforms and production lines."

The Chinese market was once the largest single market for PSA Group in the world. According to the data, the cumulative global sales of PSA in 2014 increased by 4.26% to 2.9389 million vehicles, of which sales in China increased by 31.9% to 734000 vehicles, making PSA the world's largest single market.

By 2019, PSA Group's global car sales fell 9.4 per cent to 3.49 million, of which sales in China and Southeast Asia fell 55.4 per cent to 117000. As of September this year, PSA Group sold only 31000 vehicles in China. On this basis, it is estimated that PSA Group may sell less than 50, 000 vehicles in China in 2020.

PSA is struggling to make a profit in China, and layoffs and factory closures are part of a turnaround. In 2019, it was revealed that DPCA had sold idle factories and laid off thousands of jobs. The company has launched a "yuan" recovery plan, which is expected to achieve a break-even point of 150000 vehicles by 2021, with a goal of selling 250000 vehicles.

Compared with PSA,FCA, the brand in China is relatively simple. At present, only Guangzhou Auto Fick, a joint venture with GAC GROUP, is left by FCA in China, which currently operates only the Jeep brand and owns only Liberty Man, Compass, Free Light and Big Commander models.

Data show that GAC Fick sold 180000 units in 2016 and 222000 in 2017, followed by a decline in annual sales. In the first three quarters of this year, GAC Fick's cumulative sales in China fell 47.16% to 27675 vehicles, while new cars basically stagnated, GAC Fick sales fell sharply.

Under such circumstances, GAC GROUP and FCA still signed a memorandum of strategic cooperation, and the two sides will further strengthen cooperation in the Chinese market, optimize Guangzhou Auto Fick's business, and improve the market performance of the Jeep brand by speeding up the introduction of new products and electric vehicles. In addition, FCA plans to form a joint venture with Foxconn to jointly develop and produce electric vehicles in China.

It is understood that the merger of FCA and PSA is about to be approved by the EU, and a decision on the deal is likely to be made before the end of the year. The official deadline for the EU decision is February 2 next year, while FCA and PSA hope to complete the merger by the end of the first quarter of next year. PSA Group and FCA Automobile Group may usher in new developments, but the two companies do not seem to see much surprising hope in the Chinese market, and plans to cut brands, models and factories are to be expected.

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