Carmakers PSA and Fiat Chrysler completed their merger in January. The new group of companies is called Stellantis and combines 14 automotive brands under one roof. In an online article for magazine “Absatzwirtschaft” (“Marketing”), Michael Brandtner writes about mergers of companies in the same industry and how in many cases it is “about the so-called critical mass coupled with more competitiveness for the future”. On the other hand, it is also about “synergies and savings”. Both of the above can be seen in the new Stellantis corporation, according to him. The conglomerate of multiple brands produced by the merger will not only become the world’s fourth-largest automotive group by revenue, he says, it also expects annual savings potential of EUR 5 billion. He also writes that many industries see size in particular as an important indicator of future success and position, and equate it with potential market dominance. Seen from this point of view, Stellantis and its brands Abarth, Alfa Romeo, Chrysler, Citroën, Dodge, DS, Fiat, Jeep, Lancia, Maserati, Opel, Peugeot, Ram and Vauxhall are a completely different heavyweight than previous lone actors PSA and Fiat Chrysler.
The intriguing question that Brandtner asks is this: “Could the new corporation size by itself be too little to exist permanently and successfully?” When judging a company or group of companies with multiple brands, Brandtner says there are always various types of size that should be considered to inform an opinion. Sheer corporation size does not necessarily make brands stronger for the future. Unless they are buying shares, customers do not buy corporations. They buy brands. For instance, “the global strength of the Volkswagen Group is not only in its economies of scale, but also and especially in strong core brands such as Porsche, Audi, VW, Škoda and Seat”. While the Volkswagen Group possesses leading brands in all key market segments as a result, the situation is very different for Stellantis. From a branding perspective, Brandtner believes there is essentially a single diamond in the rough: Jeep. “In August 2017, a Morgen Stanley analyst even estimated the isolated market value of Jeep to be higher than the market value of the entire Fiat Chrysler company.” If the management “does not succeed in finding the right answers and strategies for these challenges, Stellantis may become more of an expensive brand museum than the automotive answer to the future”.
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