First public statements of Carlos Tavares on the merger project between Fiat Chrysler and the PSA group with relative reassurances on the effects of the integration. The managing director of the French manufacturer, in a long interview with the BFM Business radio station, has in particular excluded the suppression of one of the 14 brands which will end up under the orbit of the new group.
Many brands? Less than the Volkswagen. The two companies have already broadly agreed on the terms of the integration agreement and now there are only technical passages such as the signing of the letter of intent, probably arriving in early December, or the go-ahead by the antitrust authorities and the assemblies of shareholders. Once the route has been completed, the new association will be able to count on numerous brands: Peugeot, Citroen, DS, Vauxhall and Opel for the French side and Fiat, Lancia, Alfa Romeo, Maserati, Abarth, Chrysler, Dodge and Jeep for Italian-Americans . For some analysts and market observers, even in light of the difficulties of some brands like Lancia, there are too many to manage. Yet for Tavares there does not seem to be, at least for the moment, the conditions to cancel some of them because their number will be lower than those in the Volkswagen group portfolio.
Brand with a fabulous history. "The entity resulting from this merger would actually have a significant number of brands," said the next CEO of the new manufacturer. "It remains, however, inferior to the number of trademarks of our main German competitor. It is part of the stakes to correctly manage the complementarity of these brands to cover the market. I see that all these brands, without exception, have a common characteristic: they have a fabulous story: we love the history of car brands, it provides us with a basis we can rely on to project ourselves into the future, and today I don't see any need, if this agreement should be concluded, to cancel brands because they all have their history and everyone has their own power". No plant closure is planned either, and in this regard Tavares cited the example of the acquisition of Opel in 2017: “when we took control of it, the situation was much more critical than today. We were coming out of 20 years of losses and we have not even closed one plant. Not to mention that FCA is a healthy company ".
Ready for anything for the Brussels ok. The 14 brands would not, therefore, be at risk of cancellation or of becoming a bargaining chip to get the green light from Brussels to the merger, although Tavares said he was ready to do everything for the OK of the European antitrust authorities. "We are ready to make all the necessary concessions," said the Portuguese manager, adding that the verification process for EU officials could be a brake on the time of the merger: "in light of all the necessary regulatory authorizations that must be obtained, an agreement of this type cannot be closed in less than a year ".
Huge value creation. Tavares has also made clear the goal of increasing the synergies provided by the integration project. The two groups aim at cost savings of € 3.7 billion a year but it is a "nominal" figure and the management – he assured – aims to achieve significant improvements over time, also because the "creation of value is enormous: the values currently discussed by the experts on their spreadsheets are lower than the annual synergies ". The difficulties, of course, are not few. Yet there are potentialities that push the Portuguese manager to express himself in a positive way above all on the capacity of the new group to face the challenges of the future. "The cost of mobility will increase and increase more rapidly than the purchasing power of our fellow citizens", but "the dimensional effect is important" to reduce costs and support the investments necessary to face the transformation of the automotive industry. In this regard, Tavares has indicated a commitment for the new company that "far exceeds five billion euros in 10 years".
No fear. The challenges are therefore enormous, starting from the difficulties of bringing the European activities of the FCA group back on track, but there do not seem to be, at least for now, fears. "The main fear we have within our executive committee is to get bored," said Tavares yesterday, receiving the award of manager of the year awarded by BFM itself. "We are facing challenges in which, obviously, to overcome them, we will have to use the size effect, for example to be able to buy batteries for electric cars at competitive prices or to dilute the colossal research and development efforts we are making. This difficulty is , for us, a real fun ". Tavares, after having praised the social partners for the "maturity" and the "farsightedness" in accepting the merger proposal, then underlined the reasons that led the two companies to start a negotiating table: "What particularly weighed is a common view of opportunities: these two companies have a number of similarities that are quite remarkable: both had great difficulties, both saw death up close and were able to recover thanks to the strength of their employees and their leaders, both they had the intelligence to understand that we will be stronger together than separately ". For this – he concluded – the merger represents "a huge opportunity".