By on April 13, 2010

Reporters didn’t hold a gun to Fiat/Chrysler CEO Sergio Marchionne’s head when they asked him where the next big industry consolidation would occur. He didn’t have to give an answer, and Automotive News [sub] certainly didn’t have to run it as a standalone story. But then, Marchionne’s Fiat is the Don Juan of the global auto industry, having been linked to flirtations with nearly every automaker in the game. If anyone has an idea of the M&A picture in Europe, it’s Sergio. His reply?

The next merger will probably be French. [PSA Peugeot-Citroen] tried with Mitsubishi and they will try with someone else… An alliance involving France and Germany is not that easy, but [the Renault-Daimler-Nissan deal is] a step in the right direction

PSA Peugeot-Citroen and BMW currently develop transverse four cylinder engines together… does Marchionne foresee a deeper relationship?

We could certainly see it happening, given industry-wide pressure to consolidate, and the two firms’ complimentary core competencies. BMW is about to get into front-drive cars in a big way, and PSA is all FWD, all the time. Both firms are private. BMW is also the lone independent German major now that Porsche has been bought by VW, while PSA lacks a deep alliance like the one Renault enjoys with Nissan. Both firms have strong presences in Europe, but neither has exactly ignored overseas or developing markets either. Best of all, the two firms’ combined sales would likely come close to Marchionne’s magical 5m unit survival threshold.

PSA and BMW admitted to holding talks last year, but said that they didn’t include industrial cooperation or an alliance. This despite PSA’s insistence at the time that it was looking for a long-term partner. But then Mitsubishi seemed like PSA’s logical sweetie last year, and look where that ended up. Which is a good reminder that speculation is easy, but making major auto industry alliances work clearly isn’t.

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6 Comments on “Wild-Ass Rumor Of The Day: Peugeot-Citroen Considering Alliance With BMW?...”

  • avatar

    Is that Deiter standing third man on the left?

  • avatar

    I remember, around ten years ago, companies buying left and right anything they could put their hands on. Ford bought Jaguar, Land Rover, Volvo and others, GM bought Saab and had already Opel and Vauxhall in Europe and Holden in Australia, even Chrysler had a strong brand in its hands: Jeep. Later, Daimler bought Chrysler. They were all making millions of vehicles. The prediction was that soon there will be just 3 to 5 mega companies around the globe. Honda and BMW were not given a chance to survive on their own. We all know how all that ended.
    I see all these alliances the same way. Some cultures just don’t mix. The result, most of the time, next to financial losses, is a dilution of the brands. When Mini came out I considered buying one. When I found out it had a Chrysler engine, made in Brazil, I crossed it from my list. Something was wrong with that picture.
    “Marchionne’s magical 5m unit survival threshold” doesn’t mean much especially for a premium brand. Management style and product are a lot more important for the survival of any company. When somebody says Citroen I think first of ID, DS and 2CV before any current products.
    There are certainly exceptions. Renault-Nissan alliance is one. Their brands kept their integrity.
    Today, BMW has a very strong image, everybody knows what they stand for. After an alliance with PSA, sharing components, and selling FWD cars would be interesting to know what they stand for.

  • avatar
    Tricky Dicky

    Yes, it’s Dieter, but an older pic. Several of those execs are no longer in position now.

    The big issue for PSA is whether or not Thierry Peugeot and the wider family are willing to relinquish control. PSA MarCap is too small to control a partner that is worth doing an alliance with, which is exactly what Fiat worked out in Feb.09. They took the route of picking up distressed assets and managing them back in to health.

    PSA show no such desire or appetite for risk. So if they are going to get hitched to BMW, then the Peugeots have got to accept the fact that it will not be an equal cross-holding, or their controlling stake is likely to be undermined. To what extent can they trust the Quandt family for the long term (like next 100 years)?

    PSA and BMW are both well run and reasonably optimised. But VW is making life uncomfortable for Premium and Volume players alike in Europe. In 10 years, following current trends of market share growth and new model development, the smaller players are going to be progressively marginalised and the Alliance terms will ecome increasingly hard to swallow.

    • 0 avatar
      Dr Strangelove

      “the Peugeots … to what extent can they trust the Quandt family for the long term (like next 100 years)?”

      Maybe a few opportune marriages can be arranged?

  • avatar

    Why does everyone just accept the 5M volume number now as obvious truth?!
    It is a self-serving comment by ONE man (Marchionne), whose vision is to run a global automotive empire (and be compensated appropriately). He wants his company to grow big, he floats a “survival” number as a target, then uses that target to justify growth and takeovers. Now the media cite this number in every article and opinion on auto M&A’s without thought to logic of reaching this target?!? Give me a break.

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