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News Analysis: Analysts say improving market presence in China essential for new automaker Stellantis

January 27, 2021


Abstract : For Stellantis, the world's fourth-largest automaker created out of a merger between Italian-American manufacturer Fiat Chrysler and France's Peugeot, it's essential to improve its market presence in China, analysts say.

ROME, Jan. 26 (Xinhua) -- For Stellantis, the world's fourth-largest automaker created out of a merger between Italian-American manufacturer Fiat Chrysler and France's Peugeot, it's essential to improve its market presence in China, analysts say.

The company has been open for business for little more than a week. It has a strong presence across Europe and in both North and South America, and it has models available in almost every market segment, from compact cars to trucks and from off-road vehicles to luxury sedans.

Furthermore, company officials say they plan to ramp up production of electric and hybrid vehicles over the coming months.

What the company does not have, according to analysts, is a strong market share in China, the world's biggest automobile market.

"A company cannot claim to be a global automaker if it is not competitive in China," Paolo Bricco, an analyst and the author of several books on Fiat, told Xinhua.

"Stellantis did everything it had to do for the merger. It got antitrust approval and shareholders voted in favor of the deal. Now the challenge is to make the merger work, to prove that the combined company is greater than the sum of its parts. Part of that involves China," Bricco said.

Pietro Paganini, co-founder of the Competere think tank and an adjunct professor of business administration at Rome's John Cabot University, said that developing a common platform across what had been Fiat Chrysler or Peugeot models will help in China.

"A company like Volkswagen has been successful in part because almost all the cars they made use a single platform," Paganini said in an interview. "Doing something similar is part of the strategy Stellantis has outlined, and when they do it that will help improve efficiency and that will prepare the company for the competitive Chinese market."

OVERSIZED WORKFORCE

Another challenge facing Stellantis is its oversized workforce as company officials repeatedly promised not to seek systematic layoffs, Paganini noted.

On a visit to Italy last week, Carlos Tavares, Stellantis' chief executive officer who held the same position at Peugeot, said that company synergies and increased efficiencies will "shield" Italian workers from layoffs.

But Paganini said something will have to change in the coming years -- either workers will have to be bought out or production will have to increase dramatically -- otherwise Stellantis' workforce will weigh the company down.

"Right now, Stellantis has around 400,000 employees and it is slightly larger than (U.S. automaker) Ford (in terms of vehicles produced)," Paganini said. "But Ford has around half as many employees. That is not a sustainable ratio for Stellantis."

Bricco said the company's plans will become much clearer when Tavares and John Elkann, the former Fiat Chrysler president who is now president of Stellantis, reveal the new company's first industrial plan. There is no exact date for that release, though media reports say it will take place in late March or early April.

"The company's leaders are working now to explain the company's strategy and so the first industrial plan will be important," Bricco said. Enditem

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Keyword: Stellantis

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