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Why FCA-PSA merger is no quick fix for their China problem

BEIJING — Fiat Chrysler and Peugeot owner PSA's merger is unlikely to provide a quick fix to their problems in China, as both companies have long struggled to find the right products at the right price for the world's top car market, analysts say. The companies said on Thursday they aimed to reach a binding deal in the coming weeks to create the world's fourth-biggest automaker by production volume. But scale alone will not make Italian-American Fiat Chrysler Automobiles (FCA) and France's PSA Group more competitive in a market where they have been slow to adapt to trends and win over consumers, leading their sales to lag far behind foreign rivals such as Volkswagen and General Motors. PSA does not have enough competitive SUV models, and neither company has enough electric and plug-in hybrid vehicles, or enough cars packed with hi-tech features for Chinese tastes, analysts say. In a market where 28 million cars were bought in 2018, FCA sold just 155,215, while PSA sold 257,723, according to consultancy LMC Automotive. At the end of September, FCA had a market share of 0.5% in China's passenger car market, while PSA's was 0.6%. Analysts say they have been squeezed by Japanese and local brands, which have product line-ups better suited to Chinese tastes at cheaper prices. "Both companies are very home-market centred and have failed to adapt to shifts in Chinese market preferences," said Bill Russo, head of Shanghai-based consultancy Automobility Ltd and a former senior Asia-based Chrysler executive. "Neither company has recognized and delivered on the trends of shared, connected and electric vehicles,” Russo said. That makes them ill-prepared to deal with further shifts in the Chinese market, which saw annual sales contract for the first time since the 1990s last year and is expected to see another drop this year. "China's overall market is experiencing a transmission and adjustment period," said Alan Kang, a Shanghai-based senior analyst at LMC Automotive. "It is very hard for these two companies, which do not have enough competitive up-to-date products, to quickly recover with the merger." FCA has a partnership in China with Guangzhou Automobile Group, which said on Thursday it backed the merger. PSA has been trying to reboot its operations in China.

Fiat 500X scampers across the Alps

It's been a long time coming, but it's finally here. It's the new Fiat 500X: the rounder, somehow even more retro version of the Jeep Renegade. Joining an ever-expanding Cinquecento lineup alongside the 500, 500C and 500L, the new 500X is - to our eyes at least - the most handsome yet... better looking, at any rate, than the somewhat ungainly Mini Countryman. But despite its more fluid lines, the new 500X is barely any longer than the Renegade and only slightly less tall.
Taking the place of the previous Suzuki-based Sedici, Fiat will offer the new 500X in two versions (one more cosmopolitan, the other more rugged), with three transmissions, three traction systems and a whole mess of different engines. The list starts with a 1.4-liter turbo four with 140 horsepower and a 1.6-liter diesel with 120 hp, later to be joined by a 1.6-liter with 110 hp, a more powerful 1.4-liter turbo with 170 hp and finally the 2.4-liter Tigershark engine with 184 hp. Gearboxes will include 5- and 6-speed manuals and - in a Fiat first - a nine-speed automatic, driving the front wheels (with our without traction control) or all four.
Buyers will also be able to choose between 12 exterior colors, seven interior combinations and eight wheel designs ranging from 16 inches to 18, adding up to a long list of configurations to give the 500X the same kind of mass-customization options that have made its stablemate so successful. The 500X will be manufactured in Melfi, Italy, alongside its Jeep counterpart and will eventually reach over 100 markets around the world - including North America.

Carmakers ask Trump to revisit fuel efficiency rules

Car companies operating in the US are required to meet stringent fuel efficiency standards (a fleet average of 54.5MPG) through 2025, but they're hoping to loosen things now that President Trump is in town. Leaders from Fiat Chrysler, Ford, GM, Honda, Hyundai, Nissan, Toyota and VW have sent a letter to Trump asking him to rethink the Obama administration's choice to lock in efficiency guidelines for the next several years. The car makers want to revisit the midterm review for the 2025 commitment in hopes of loosening the demands. They claim that the tougher requirements raise costs, don't match public buying habits and will supposedly put "as many a million" jobs up in the air. The Trump administration hasn't specifically responded to the letter, although Environmental Protection Agency nominee Scott Pruitt had said he would return to the Obama-era decision. The automakers' argument doesn't entirely hold up. While the EPA did estimate that the US would fall short of efficiency goals due to a shift toward SUVs and trucks, the job claims are questionable. Why would making more fuel efficient vehicles necessarily cost jobs instead of pushing companies to do better? As it is, even a successful attempt to loosen guidelines may only have a limited effect. All of the brands mentioned here are pushing for greater mainstream adoption of electric vehicles within the next few years -- they may meet the Obama administration's expectations just by shifting more drivers away from gas power. This article by Jon Fingas originally appeared on Engadget, your guide to this connected life. Related Video: News Source: ReutersImage Credit: Daniel Acker/Bloomberg via Getty Images Government/Legal Green Chrysler Fiat GM Honda Hyundai Nissan Toyota Volkswagen Fuel Efficiency CAFE standards Trump