Howes: An FCA-PSA alliance? Rule nothing out.

Daniel Howes
The Detroit News
Carlos Tavares, CEO of Peugeot and Citroën's parent Groupe PSA SA, delivers full-year financials last month in Paris.

Fiat Chrysler Automobile NV CEO Mike Manley is a chip off the proverbial block — the Sergio Marchionne one, to be exact.

At this week’s Geneva Motor Show in Switzerland, Manley conceded the Italian-American automaker would not rule out potential alliance discussions with Groupe PSA SA of France: FCA would consider “any deal that would make Fiat stronger,” Bloomberg reported Manley as saying, referring to the maker of Peugeot and Citroën cars.

It's vintage Sergio-speak, delivered in Manley's British accent: confirm reality, exclude little and commit to nothing, whatever the ensuing publicity. What that could mean — if anything — remains to be seen. But it signals that nothing is certain in the global auto industry except change.

FCA is not immune. Even as its financials continue to improve thanks to its Jeep and Ram brands, and even as the automaker is planning a new Jeep assembly plant in Detroit, FCA is keen to improve the performance of its founding Fiat brand, especially in Europe. One way to get there could be achieving greater engineering and manufacturing scale in an alliance with a rival like PSA.

The French automaker is a company to watch. It ended General Motors Co.’s European nightmare when it bought its Opel and Vauxhall brands, controlled by the Detroit automaker for some 90 years. After two decades of losses, PSA delivered GM's German and British brands to profitability ahead of schedule — a feat GM CEO Mary Barra concluded was not worth the expense. 

PSA CEO Carlos Tavares, a Portuguese-born executive schooled in France, is shaping up to be a next-generation Carlos Ghosn, his one-time boss at Renault SA until Tavares left to run rival PSA. Ghosn is the globe-trotting former CEO of the Renault-Nissan alliance released this week from a Tokyo jail after a 108-day detention he called a "terrible ordeal."

Courtroom sketch depicting former Renault Nissan CEO Carlos Ghosn in a courtroom at Tokyo District Court on Jan. 8, 2019. Ghosn denied wrongdoing on charges of financial crimes.

Now Tavares is the CEO in a hurry. With Opel and Vauxhall back in the black, and group profitability rising, PSA is poised to re-enter the competitive U.S. market in a move that would reassert the automaker as the industry’s up-and-comer — for now.

At last year's Detroit auto show, Tavares offered a small group of writers a glimpse into PSA's strategic thinking: “It’s not because we are successful in Europe that we would be successful in the U.S. We are making good profit. We have no debt. We don’t need to rush. We want to make sure we are not arrogant in the way we think consumers are viewing us. We need to do things right.

“We have a strategy to become global,” he added. “It protects the company to have a diverse footprint around the world. PSA is making money in Latin America. It is making small money in Russia. We consider ourselves small and agile, which does not give us the ability to be dogmatic. We are very open to make business with anybody else.”

Tying up somehow with the maker of Ram trucks and Jeep SUVs, arguably the most valuable American auto brand on the planet, could prove very attractive for a European brand eyeing the rich U.S. market after a 28-year hiatus. 

Which leads back to Manley, who rose to become FCA's CEO just days before his mentor died last July in a Zurich hospital. By his own telling, Manley spent nearly a decade working for and alongside Marchionne, a strategic thinker who often proved more willing to utter the hard truths publicly that his rival CEOs acknowledged but were too timid to say so.

Bring it on, Marchionne would have said about Tavares' search for a potential partner. FCA's legendary CEO tried to woo General Motors Co. and its CEO, but failed. He courted Volkswagen AG, at least from afar, until its Dieselgate scandal made any kind of partnership unlikely. In a manifesto he entitled "Confessions of a Capital Junkie," Marchionne argued for industry consolidation that essentially stated his case for an FCA tie-up with GM.

Manley witnessed it all, a continual quest to improve the company's financial performance by improving the reality of its operations. One abiding constant: rule nothing out until you check it out.


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Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.