Under the wave of global automotive electrification, the life of some traditional auto giants has become increasingly difficult, and the past decade has suffered from economic crisis and market share decline, and the development status of conservative and lacking change of traditional auto giants is not optimistic.
Chrysler, Fiat, PSA, ten years ago, it was hard to imagine that such a global auto giant would fall into consolidation, when Chrysler was still a close alliance with Daimler, PSA was an important research and development partner of BMW, And Fiat has always had Ferrari.
The global automotive aircraft carrier Stellantis formed by the three giants has become the world's fourth largest automobile group, but the survival status of each brand is not good, especially in the Chinese market, Fiat withdrew from the Chinese market early, Peugeot and Citroen are increasingly marginalized, Jeep's niche route is difficult to start, and Chrysler has long disappeared.
In order to recover, Strandtis must do more, re-plan the brand positioning, re-establish the advantages of new technologies, re-plan the organizational structure, and regain the confidence of senior management and employees to win.
Not long ago, Plantis released the 2030 Vision Blueprint, planning to launch 75 electric vehicles by 2030, and strive to achieve the goal of annual sales of electric vehicles exceeding 5 million within nine years, when the proportion of pure electric vehicles in the company's revenue will also rise from the current 3% to 52%.
Although Strantis will focus on electrification for future development, whether the development of electrification can drive the huge Strantis, electrification is a new track, there are many competitors, competition is still fierce, and it is not a good medicine for resurrection, so Strantis needs more changes.
The broader market needs new mechanisms
Strantis is a new car company, does not represent the new car manufacturing force, in its bones is an old car company.
On 16 January 2021, PSA and Fiat Chrysler Group (FCA) merged to form the new group, Strantis, which has a large number of well-known brands and includes 14 brands, including Citroën and Maserati, Fiat, Opel, Peugeot, Alfa Romeo, Chrysler, Dodge and Jeep.
Judging from the official financial reports released before the merger, the epidemic and the market have had a considerable impact on the two companies, which may also be one of the reasons for promoting the merger. PSA sold 1.03 million units in the first half of 2020, down 45.7% year-on-year, and revenue of 25.12 billion euros, down 34.5% year-on-year. FCA's net income in the first quarter of 2020 was EUR 20,567 million, down 16% year-on-year; net income in the second quarter was EUR 11.7 billion, down 56% year-on-year.
On March 3, 2021, According to data released by Plantis, Fiat Chrysler's adjusted EBITDA for the full year 2020 was 3.7 billion euros, with a margin of 4.3%, and PSA Group's automotive business adjusted operating margin of 7.1% and adjusted operating profit of 3.4 billion euros. Carlos Tavares, chief executive of Strantis Group, said this shows that Strantis has a solid financial foundation and is off to a good start.
From this perspective, Strandis has great potential for development, but the merger of two large groups into a new group, bloated institutions, huge systems, rigid mechanisms, management ethos, etc. are all problems that the new group needs to face.
In terms of institutional reform, Tang Weishi will face great pressure, and how to establish an efficient organizational structure and mechanism is an important key to the revitalization of Strantis
Electrification cost pain points
Strandtis focuses on electrification, but what about its level of electrification?
The level of electrification is decent, "Auto Overseas Mergers and Acquisitions" said in an interview, Strantis's new energy strategy is more brands, more models, and more business, and on the whole, like other transformed OEMs, the level of electrification is decent. Compared with the speed of electrification transformation of German and Japanese brands, the former is undoubtedly much behind.
Technology is one big reason, the other is the cost problem, the transformation of electric vehicles is costly. Bozzola, president of the Automotive Innovation Alliance, a lobby group for automakers and suppliers, said on March 4: "The automotive industry will spend $330 billion on electrification alone in the next five years. ”
Tang Weishi also said in an interview that the cost of transitioning to electric vehicles is beyond the limits that the current automotive industry can afford. Electrifying the automotive industry will result in a 50% increase in the cost per vehicle compared to conventional fuel vehicles, but they cannot pass the cost on to the ultimate consumer, so most middle-class consumers cannot afford to pay.
Faced with the high cost of transitioning to electric vehicles, traditional automotive fuel vehicle manufacturers either raise prices and reduce production, or accept lower profit margins to cope with the increased costs of the transition to electric vehicles. In the process of transition to electric vehicles, traditional fuel vehicle manufacturers are facing dual pressure from relevant institutions and investors to accelerate the transformation to electric vehicles.
In order to transform the Group, Strantis plans to launch the School of Software, Data and Electrification, and by 2024, excluding the team of partners, the Group will have 4,500 software engineers and invest more than €30 billion in software and electrification by the end of 2025. In terms of talent and funding, Strantis is paying enough attention to accelerate electrification.
In addition, the global chip shortage has also affected the development of the automotive industry. Affected by the new crown, the automotive industry was hit hard for a while, but as the global economy gradually recovered, consumer demand for cars increased and encountered a global chip shortage.
Faced with this problem, some manufacturers will choose to cancel certain functions to deal with it, while other manufacturers will choose to store the vehicle and assemble it later. Tang Weishi said that the predictability of the chip condition is not high. Due to the complexity of the technology involved, it takes about 18 months to redesign a car to use a different chip, he said.
According to CCTV financial reports, the Great Wall New Energy hot-selling model Euler Black Cat has a price upside down after the rise of raw materials in 2022, with a loss of about 10,000 yuan per vehicle. In addition to the lack of cores, the core raw materials of the battery, lithium carbonate, graphite, etc., the sharp rise in prices will also increase the cost of car manufacturing.
The Chinese market remains challenging
The Strantis 2030 development plan also sets out separate targets for the Chinese market, where the company will adopt an "asset-light" operating model and plan to expand revenues to 20 billion euros by 2030. According to the company's financial report, revenue in the "China, India and Asia Pacific" region totaled 3.9 billion euros in 2021.
In fact, It is not unreasonable for Plantis to make this layout. DPCA and Guangfiq are two auto joint ventures of Plantis in China. From 2016 to 2020, Shenlong's sales in China have been decreasing, although the 2021 Citroën C5X has caused a good response in the market, with monthly sales of 5,000 units.
For the best-selling models on the market, this achievement is certainly not worth mentioning. Moreover, with Ashkenazi and Japanese selling well in the Chinese market, as well as the rise of independent brands, Strandis does not have an advantage.
Although Tang Weishi once said that the Chinese market is important, it is a big challenge for Strandtis how to operate in the Chinese market and how to achieve localization.
In addition, the situation in Russia and Ukraine affects the automobile companies, after many car companies have adjusted their Russian business, Strantis is no exception, the Russian factory production Citroën, Opel and Peugeot light commercial vehicles, and Strantis is ready to start exporting these products to Western Europe, and some Russian truck production will be transferred to Western Europe. Russia, the world's eighth-largest auto market, may not be wise to exit.
Chips, raw materials, technology, market layout, geopolitics, competition and other factors have brought challenges to the development of Plantis, slowing down the pace of enterprise development to a certain extent, and it is necessary to make deeper efforts to achieve the development vision of 2030.
Written by Xiang Qian
Editor-in-Chief Sun Chen
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