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OPINION: STELLANTIS – A Bad Deal For Chrysler And The United States:

Why Could The Merger Be The End Of Some Of Our Favorite American Brands...

My name is Frank B. Rhodes Jr. and my great-grandfather, Walter P. Chrysler founded the Chrysler Corporation in 1925. His namesake model, the Chrysler Six was introduced in 1924. A 1972 Antique Automobile article was forthright in its analysis stating, “This rather ordinary-looking machine stands second only to the Model T Ford in its revolutionary impact on the industry. Beyond a doubt, this car stands alone as the dividing line between what may be termed ‘old’ and ‘modern’ cars.”

Chrysler Corporation Founder Walter P. Chrysler, next to his first 1924 Chrysler Six. (Frank B. Rhodes).

Remember the DaimlerChrysler merger of equals? Well Fiat Chrysler Automobiles (FCA) and Groupe PSA are about to engage in such a merger. The bottom line is that PSA has six voting members to five from FCA, and we know that the French and their Government will be in control. This merger will go sideways in the future and throughout this option article, as I will show some of the possible outcomes. 

For the past several years, I have sent letters to cajole individuals into believing in the Chrysler brand. My letters have gone to the Chairman of FCA, John Elkann; FCA CEO Mike Manley; French President, Emmanuel Macron; French Finance Minister, Bruno LeMaive; Groupe PSA Chairman of the Managing Board, Carlos Tavares; U.S. Trade Representative Ambassador, Robert Lightizer; Prime Minister of Italy, His Excellency Giuseppe Conte; President Donald Trump; 6 automobile publications, and 34 executives and FCA Board Members. Out of all of the letters I sent out asking for support for the iconic Chrysler brand, only one sent a reply.

Me and my 2018 Chrysler 300S AWD. (Frank B. Rhodes).

In a January 20th, 2020 article, Detroit News posted an article “Chrysler’s ‘identity crisis’ puts brand’s future at risk”, in which I reached out to Mr. Tavares and actually heard back in February. In his correspondence, Mr. Tavares had no commitments regarding the Chrysler brand, however, he had a positive tone and legally could not elaborate on the merger.

When I wrote to former leaders of the remains of my great-grandfather’s company, they at least had the courtesy to respond. Former DaimlerChrysler CEO Dieter Zetsche and former Chrysler Group CEO Robert Nardelli would at least write back with a response. But not the Italians. American-born FCA Chairman John Elkann may preside over what is left of the company that my great-grandfather started, but does he care about the brand that bears his name? 

1955 Chrysler 300 Sport Coupe. (Chrysler Historical Archives).

Elkann, who also sits on the board for the publication, The Economist, a weekly publication that focuses on current affairs, international business, politics, and technology. Exor, the company that Elkann oversees for his family (the Agnelli family who owns the majority of FCA), bought a 43.4% stake in the magazine which disagrees with our President and says that the Chinese are re-inventing capitalism and not to “underestimate” it. Does that seem like someone who has an interest in saving an iconic American brand like Chrysler?

In September, the Automotive News posted an article listing future FCA products. Nothing for the Chrysler brand was listed beyond 2021, however, both the Alfa Romeo and FIAT brands have products in the pipeline. Both brands have not gained traction in sales in the North American market since they were relaunched and their numbers aren’t even close to what the Chrysler brand puts out with a limited number of product offerings. Rumors have the Chrysler brand disappearing before 2025, 100 years after the original Chrysler Corporation’s founding. 

2021 Chrysler Pacifica Pinnacle AWD. (Chrysler).

As of the 2021 model year, the Chrysler brand is only made of four models, three of which are the same vehicle just launched with different names based on price class and equipment. The Chrysler Pacifica, Pacifica Hybrid, and Voyager (Grand Caravan in Canada) make up the majority of the brand sales and are the only products that the brand public relations focus on. 

The Chrysler 300 Series sedan on the other hand lacks a marketing budget and looks to be headed to the parking lot in the sky after this generation is done. In 15 years time, the Chrysler 300 went from the car that was defined as the halo car for the brand and the company, to a back seat afterthought. Chrysler has shown some interesting products for the Chrysler 300. Products like the Chrysler 300 Super S Concept and the 300 SRT are products I have seen the public begging for years, but no one is listening. Dodge has had success from its limited-edition offerings, why not the Chrysler brand?

2019 Chrysler 300 SRT “Pacer Edition”. (Chrysler Australia).

As people push more towards pickups, crossovers, and SUVs, the Chrysler brand is left without a legitimate option to today’s changing market. Chrysler has teased the Chrysler brand as some sort of “conceptual” technology brand with vehicles like the Portal Concept and this year’s Airflow Vision Concept, but what about some real products? We have heard about a possible SUV based on the midsized Cherokee, however, there has yet to be anything announced other than minivan offerings for Chrysler.

The current Chrysler badging is so limited on the current products, one might not know what it is. All Stellantis needs to do is to change the small “Chrysler” logo on the front and back of the vehicles, and replace it with Peugeot. Just like the Dodge Ram trucks being rebranded as Ram Trucks. It could be sold off piecemeal like the Jeep brand if they wanted.

I sent these pictures to FCA giving the idea of a premium full-size Ram-based Chrysler Pickup and got no response. (Frank B. Rhodes).

Recently, Groupe PSA announced that it repurchased 10 million common shares of Peugeot S.A. (PSA Shares) from Dongfeng Motor Group (DFG) as part of its agreement to the merger. While the shares accounted for 1.10% of PSA’s total, the Chinese-based DFG still owns a remaining 20.7 million shares of the company. The Share Repurchase Agreement between the two companies stated that the remaining shares were to be sold to Groupe PSA by December 31st of this year, or if not to Groupe PSA by that date, to a third party by the end of 2022. This means the new company identity into a dangerous position by allowing another automaker or another Chinese corporation to invest at a later date. Remember, to evade U.S. regulators the percentage of foreign investment by certain governments needs to be under 5%.

The Chinese have proven to be methodical and are working slow and steady towards their end goal of overtaking the global economy. In a recent Wall Street Journal article, it was shown that many of Europe’s mergers and acquisitions had been influenced by the Chinese state which went unnoticed due to “layers of ownership, complex shareholding structures, and deals executed via European subsidiaries.

European governments have been found to lack a system like “The Committee on Foreign Investment in the U.S., known as CFIUS, which can block international acquisitions in the U.S. based on national security grounds”. So this leads to the question of how large both FCA and PSA are, and what can ensure that this will not happen during the merger?

Jeep® Gladiator XMT by AM General. (Jeep®).

DFG, a publicly-traded company is 66% owned by the Chinese Communist Government and is a subsidiary of Dongfeng Motor Corporation, which manufactures military vehicles for the Chinese. The Democratic Socialist Government of France also owns stock in PSA. Last year, FCA announced that its iconic Jeep® brand was partnering with AM General, the famed manufacturer of light tactical vehicles to create the Jeep Gladiator Extreme Military-Grade Truck (XMT). The Gladiator XMT is looking to be the next light tactical vehicle for the U.S. military and that being said who would want the possibility of the Chinese have any involvement or knowledge of that vehicle? Do not be confused with the Dongfeng “east wind” rocket. In my opinion, this intertwining Chinese corporate structure might portend a security threat to the U.S.

It also means that our American Jeep brand could be up for grabs. If the Stellantis merger goes sour as the DaimlerChrysler deal did, all options could be on the table. You might remember, how Cerberus Capital Management (which owned Chrysler Group from 2007 to 2009) put the Dodge Viper as its own unique brand up for sale to anyone because they were desperate for cash. It came after Cerberus’ announcement that it would not just gut the company to make money and that they weren’t in it for the long haul. It proved to be a lie in just two short years of ownership. This could mean that the Chinese or another automaker could easily purchase the American brand, which is currently FCA’s most valuable asset.

Me next to my 1962 Dodge M-37 Military Truck. (Frank B. Rhodes).

The Dodge and now Ram Truck brands also have a rich military history. The 1916 Dodge Touring was the first automobile used by the U.S. Army under the command of General John T. “Blackjack” Pershing. It was used in the Pancho Villa Expedition during the Mexico Border War between the U.S. and Mexico.

The former Chrysler Corporation continued this legacy during World War II. This included thousands of Sherman tanks that helped defeat the Axis Powers. Chrysler then participated in the Korean War and the Vietnam War, becoming one of the larger suppliers of ordinance to the U.S.

Dodge WWII Military Truck Advertisement. (Frank Rhodes Collection).

Back in July, I received correspondence from FCA-PSA stating that the new company will be called Stellantis. The letter also stated, “importantly our vehicle brand names remained unchanged. The storied Chrysler brand is still in our garage, as are our other brands – Dodge, Ram, Jeep as well as Fiat and Alfa Romeo to name a few”. After reading the DFG Share Repurchase Agreement last month, I started investigating the deal. PSA North America CEO Larry Dominique (once a Chrysler employee) said, “he is focused on bringing PSA to America, regardless of the FCA merger”. 

After FCA, spent billions on bringing the Alfa Romeo and FIAT brands to North America, the two Italian brands still are struggling to gain traction despite the Alfa Romeo brand getting a 17% increase in sales during the third quarter of this year. Only 5,056 Alfa Romeos were sold during the quarter, across three models. Compared those numbers to the Chrysler 300 Series sedan which sold 3,170 units during the same time (with a 60% decrease in sales over the same time last year) and virtually no advertising budget behind it, clearly Americans haven’t embraced the Italian brands as the company had hoped.

But now, there will be a push for more brands to join the competitive U.S. marketplace like Peugeot, Citroën, and Opel. More advertising dollars and focus away from the Chrysler and Dodge brands, which continue to soldier on with only a few models. Chrysler has been a part of our American fabric since 1924 and Dodge since 1914. Peugeot sold cars in the U.S. from 1968 to 1983 and now is expected to make a return in three years. I just don’t see them being a major player in the market, as the core American brands. 

In the letter, I received from FCA-PSA in July, there is a fine print at the bottom. The disclaimed says “forward-looking statements “ such as “ may’, “will”, “ expect”, “anticipate”,” remain”, “target” etc… “or similar terms”. Forward-looking statements are not guarantees of future performance”.  In that statement, it tells me that nothing is in concrete for the future of the Chrysler brand and to relaunch the successful Pacifica into another brand (like they did with the Grand Caravan nameplate to the Chrysler brand in Canada), even a brand like Peugeot.

Dodge WWII B-29 Superfortress Advertisement. (Frank B. Rhodes Collection).

For those who truly care about the integrity and history of the Chrysler, Dodge, Jeep, and Ram brands, I encourage you to contact your local members of Congress. All of the pleasantries, synergies, handshakes, and smiles regarding this merger is covering up the realities of a deal that is bad for the U.S. FCA is pushing hundreds of filings through the SEC to get this deal completed as fast as possible. The Chrysler, Dodge, Jeep, and Ram brands need to stay the focus of the American people and protected.

In my opinion, the Chrysler, Dodge, Jeep, and Ram brands to come home where they belong!

 

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