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PSA reportedly ditching its two tiny gasoline city cars ahead of merger

The Peugeot 108.   PARIS — PSA is ending the production of Peugeot and Citroen small city cars, three sources told Reuters, withdrawing from an increasingly unprofitable market as its starts a strategic review ahead of its planned merger with Fiat Chrysler. While PSA had already agreed to sell its stake in its Czech joint venture with Toyota where the Peugeot 108 and Citroen C1 models are made, the decision to stop selling the gasoline cars altogether has just been taken, the sources said. Carmakers are reviewing the production of vehicles with combustion engines as they need to fit costly exhaust filtering systems to meet tighter emissions laws. That's pushing up the cost of some so-called entry-level A segment cars to the point where they are hard to justify economically. "PSA is getting out of both the factory and the A segment business, as it is offered today, and on which manufacturers have arguably lost the most money in Europe," one of the sources familiar with the matter said. PSA declined to comment on the future of the two small cars. It said it was reviewing which products would best meet customer expectations in the A segment and cope with European carbon emissions targets. "This means a reflection with fresh and disruptive ideas," a spokesman for the French carmaker said. The European Commission is planning to tighten its emissions limits for cars under new proposals designed to cut the bloc's greenhouse gas output further by 2030. PSA's merger project with FCA has also increased the options available, two of the sources said, as the Italian-U.S. company has no intention of abandoning its small best-selling Panda and 500 models. Both already have hybrid versions and the 500 is also available in full electric mode. "Current projects could be replaced by new ones made possible by the merger with FCA", another source said. "The merger is turning all the cards around, especially when you consider that the A segment, from the very first 500 to the Panda, is inseparable from Fiat history". FCA declined to comment. PSA and FCA aim to finalize their merger in the first quarter next year to create a new company called Stellantis, which will be the fourth-biggest automaker in the world. Market contraction The European market for frugal city cars has been shrinking for several years.

Stellantis wants to trim 3,500 hourly U.S. jobs, UAW says

WASHINGTON — Chrysler-parent Stellantis NV wants to cut approximately 3,500 hourly U.S. jobs and is offering voluntary exit packages, according to a United Auto Workers union letter made public Tuesday. The automaker is looking to reduce its hourly workforce offering incentive packages that include $50,000 payments for workers hired before 2007, UAW Local 1264 said in a letter dated Monday posted on its Facebook page. Stellantis spokeswoman Jodi Tinson declined to comment. A person briefed on the matter said the figure might be lower than the figure cited in the UAW letter. In late February, Stellantis indefinitely halted operations at an assembly plant in Illinois, citing rising costs of electric vehicle production. The action impacted about 1,350 workers at the Belvidere, Illinois, plant that built the Jeep Cherokee SUV and resulted in indefinite layoffs. The automaker has warned it may not resume operations as it considers other options. The UAW letter said openings created by workers leaving would be filled by workers on indefinite layoff. Stellantis said in February that about 40,000 U.S. hourly workers were eligible for profit sharing. Last week, UAW President Shawn Fain said Stellantis' decision to idle the Illinois plant was "a flat-out violation" of the union's contract with the UAW and is unacceptable. The UAW will enter talks with the Detroit Three before labor contracts expire in mid-September. Earlier this month, General Motors said about 5,000 salaried workers accepted buyouts to leave the automaker. GM CEO Mary Barra said February job cuts of a few hundred jobs and the 5,000 buyouts "provided approximately $1 billion towards" a $2 billion cost cutting target. Ford Motor Co recently announced significant job cuts in Spain, Germany and other parts of Europe and in August said it would cut a total of 3,000 salaried and contract jobs, mostly in North America and India. Hirings/Firings/Layoffs UAW/Unions Chrysler Dodge Fiat Jeep Maserati RAM Stellantis

FCA and Peugeot reportedly agree on merger

Citing a Wall Street Journal report, the Detroit Free Press says "Fiat Chrysler and PSA Groupe have agreed to merge." The Journal reported on talks between the two car companies only yesterday. It's said that Peugeot's board met yesterday to approve the deal, FCA's board met today, and an announcement could come as soon as tomorrow, Thursday. Both automakers have released statements, but neither company has released any information beyond admitting to ongoing talks. If the merger happens, the combined entity would become the world's fourth-largest carmaker with a $50 billion valuation, slotting in behind Toyota, the Volkswagen Group, and the Renault Nissan Mitsubishi alliance. Among the merger options possible, "an all-stock merger of equals" is the one analysts and Moody's seem to give the best grade. The reported merger would come about four months after FCA walked away from merger talks with Renault. FCA said the French government scuppered those talks over the role of Nissan in a reformed entity, but there were also brewing issues with French unions, and ongoing turmoil among Renault and Nissan leadership thanks to continuing fallout from ex-CEO Carlos Ghosn's arrest last year. FCA makes most of its revenue in the U.S. and rules Italy, while Peugeot is the second-best-selling automaker in Europe with its own brand in France and Opel in Germany. The two companies already have a partnership in Europe making vans, one that FCA CEO Mike Manley has spoken highly of. Among the list of obvious benefits in a potential merger, FCA would get access to Peugeot's small, modern platforms, $10.2 billion in cash, and electrified and hybrid architecture developments, the latter especially important to FCA as those are fields where it lags. Peugeot would get much easier access to the U.S. market, and the money-printing brands Jeep and Ram. A merged carmaker would have combined sales of nearly 9 million a year, based on 2018 results. By comparison, both Volkswagen and Toyota sell over 10 million cars a year, while the Renault-Nissan-Mitsubishi alliance almost 11 million. Peugeot CEO Carlos Tavares has proved he knows how to do turnarounds and mergers. After leaving a position as Carlos Ghosn's right-hand man in 2012, Tavares took over Peugeot in 2014, navigated a bailout from the French government and China's Dongfeng Motors in 2015, and turned PSA into a regional powerhouse.