Every merger is underpinned by a promise for cost-cutting, which comes against political resistance. In the case of the Fiat Chrysler merger with PSA, the emerging conglomerate will have French, Italian, and Chinese industrial policy considerations to take on board. British concerns will not be a top priority.
This development is raising concerns for Vauxhall, owned by PSA, which employs 3,000 people in the UK.
The new conglomerate will own household brands like Peugeot, Citroen (France), Fiat, Alfa Romeo, Maserati (Italy), Jeep (US), Dongfeng (China), Opel (Germany), and Vauxhall in the UK.
The emerging conglomerate will seek to make swift productivity gains, releasing capital for Research and Development, particularly in the development of electric and autonomous vehicles. That inevitably means plant closures. One of the possible targets will be Ellesmere Port, not least due to Brexit uncertainty.
The combined group will be based in the Netherlands. The company will have an 11-person board, including CEO Carlos Tavares (Peugeot), John Elkann (FCA), a member of the Agnelli family, five additional members of the FCA group, the French state, and China’s Dongfeng Motor. There is no seat for the German or British arms of the conglomerate.
Overall, the outlook for British car production is bleak, falling by 3,8% in September and 15,6% for the whole of 2019. Fears over a possible no-deal Brexit dampened demand and exports fell 3.4%, according to the Society of Motor Manufacturers and Traders (SMMT), Reuters reports.
British car manufacturing is tightly integrated with European suppliers and markets while eight out of ten cars built in the UK are exported. Political uncertainty combined with a massive gap in investment – while the industry is in technological transition – could mean that the UK is unable to maintain its place as a production hub of European significance.