Next June 17th the European Commission will decide on the merger project between PSA Peugeot Citroën – Fiat Chrysler and will thus give the green light for the finalization of the project which has been pending for a while. This marriage between the two manufacturers will give birth to a new Franco-American-Italian global giant.
The two brands had declared that they were continuing to prepare the terms of their merger so that it would be finalized in late 2020 or early 2021.
The merge of FSA and PSA Group is making the world’s fourth-largest automaker
The process was announced on October 31, 2019. Fiat Chrysler Automobiles and PSA Group are fusing to become the world’s fourth-largest automaker. Multiple brands of vehicles like Alfa Romeo, Citroën, Chrysler, Dodge, DS, Fiat, Maserati, Opel, Peugeot, Ram, and Vauxhall will all now operated by a single corporate parent. In a press release, Fiat Chrysler and PSA claimed that this 50/50 merger should be saving more than nearly $4 billion a year from “run-rate synergies without any plant closures.”
Fiat Chrysler automobiles was planning for a while to fuse with another large automaker. The ex-CEO Sergio Marchionne tried to make deals with many potential suitors, and earlier this year FCA was conducting real talks with Renault. However, the talks were unsuccessful and FCA will finalize its merger with the PSA group, which is also known to be a major car manufacturer worldwide.
On the one hand, the merger makes a lot of sense. FCA is known for its strong sales in the Americas and a decent portfolio of luxury brands and SUVs and trucks. On the other hand, PSA is much stronger in Europe, and its brands are better mainstream cars built adopting modern architectures. PSA Group is also better than FCA when speaking about electrification.
The result of this merger, which has yet to be named, will be registered in the Netherlands, but it will ” keep being significantly present in France, Italy, and the US, where the current operating head-office is located” PSA Group boss Carlos Tavares will be CEO of the 11-person board, and FCA’s John Elkann as chair.
According to 2018’s results, the new company would have 8.7 million sales, combined revenues of $190 billion (€170 billion), and $12.3 billion as a profit. However, from next year those profits are threatened by massive European Union fines that await any OEM unable to get its fleet-wide emissions below 95g CO2/km. Earlier this year, we’ve been informed that an agreement was settled between FCA and Tesla, where it would pay the US automaker “hundreds of millions” of dollars so as to consider the American EVs as a part of its European line.
However, the new alliance will take advantage of the variety of its offer available in its portfolio and the pooling of production chains, means, and technologies to sell at competitive prices. As a result, Tesla would be the biggest loser.
Regarding the American market, PSA had expressed its wish to recover in the territory of the United States although a car-sharing service known as Free2move is already present. Regarding the American consumer’s behavior and their reaction to this new merger, it is recalled that it was early to rule on this point by the group.
