Analysis: Stellantis and the road ahead in India 

by Murali Gopalan 22 Jan 2021


Stellantis has become a reality and its CEO, Carlos Tavares, recently articulated the company’s priorities and road ahead in a detailed press conference.

The newly merged entity of Groupe PSA and Fiat Chrysler Automobiles (FCA) will seek to consolidate its strengths in Europe and the Americas. Tavares said China is an area of concern and a host of options could be explored in an attempt to revive the fortunes of both PSA and FCA in the world’s largest automobile market.

Whither India?
How about India where both companies are present and will now operate under the Stellantis umbrella? FCA has been around longer and has a facility in Ranjangaon near Pune as part of a joint manufacturing pact with Tata Motors. PSA, in its turn, is a more recent entrant (actually a comeback after it exited India way back in 1997) with a plant in Tiruvallur near Chennai. It is ready to launch its debut offering, C5 Aircross, under the Citroen brand in March this year.

With Stellantis now in place, there are a host of issues that will need to be resolved going forward. One, will the merged entity have a common CEO for India? If so, will this individual be a representative from PSA or FCA? At present, both companies have senior leadership structures in place but it is not clear if there will be just one boss for the merged entity.

Second, how will key functions like marketing, finance and HR among others work, going forward? Logically, those entrusted with these responsibilities will continue to take care of their own brands, be it Jeep or Citroen, but will there be another person roped in as an overall head? Once again, this remains to be seen and it may take a few months before the answers to these questions are in place.

Quite clearly, both brands will operate independently at the front end but there will be massive synergies at the back end in order to better optimise costs and competencies. As part of this effort, some people could even be reassigned responsibilities as part of the drive to create a stronger and more productive entity in India.

The fear of job losses is only natural during events like a merger though Tavares made it quite clear that the creation of Stellantis would double up as a shield for such eventualities. One could therefore assume that layoffs will not happen at least for now. As in the case of any organisation, only those with the right skills and who are perceived as critical to the workforce will be retained going forward.

It will also be interesting to see if the Fiat brand will be revived as part of the Stellantis agenda for India. There is no question that it still enjoys great recall and there would, therefore, be a strong case to have Fiat play a role perhaps in the compact car segment. Jeep can take up the top-end SUV space while Citroen can play around both in the premium hatchback as well as  in compact SUVs. New platforms can be envisaged where the skills of PSA and FCA will be leveraged to the best extent possible.

Both companies have their engineering and R&D centres in Chennai which means that there will be greater collaboration in the future. FCA has also announced setting up of a digital hub in Hyderabad which will now be part of the Stellantis umbrella.

The interesting twist is FCA’s Ranjangaon facility, which is part of a joint venture with Tata Motors. The Indian company has already made it known that it is looking at spinning off its car business which will involve roping in an ally. Will this be Stellantis which means then that the new entity will then have access to Tata’s car plants in Pune and Sanand (Gujarat) as well? 

Throw in Jaguar Land Rover into the competencies basket and the net outcome will be truly formidable. Alternatively, will Stellantis buy out Tata Motors’ stake in the manufacturing JV at Ranjangaon in order to consolidate its India presence? There are many questions to ponder over, though the answers may take time in coming.