Fiat Chrysler and PSA Peugeot sign deal to form fourth-biggest car firm
Chrysler and PSA Peugeot have signed a binding deal to merge the two firms, creating the world’s fourth-largest car company.
The companies said the new group will be led by PSA’s cost-cutting CEO Carlo Tavares, with Fiat Chrysler’s John Elkann becoming chairman of the merged company.
No name for the new company has been decided yet.
Fiat Chrysler CEO Mike Manley will stay on, but it was not announced in what capacity.
The 50-50 merger — unveiled in October — gives birth to a group with revenues of nearly $170bn (£143.6bn) and producing 8.7 million cars a year — just behind Toyota, Volkswagen and the Renault-Nissan alliance.
The companies said the merger would create €3.7bn (£3.12bn) in annual savings, which will be invested in “the new era of sustainable mobility” and to meet strict new emissions regulations around the globe.
No factories will be closed under the deal, the companies said. The savings will be achieved by sharing investments in vehicle platforms, engines and new technology, while leveraging scale on purchasing.
Executives also said there would be cuts. Decisions on where those will come will be made after the deal closes.
The deal was announced as a 50-50 merger, but PSA has one extra seat at the board and Mr Tavares at the wheel, giving the French car maker the upper hand in daily management.
Executives expect the deal to take 12 to 15 months to close.
The car makers said in a joint statement: “The merged entity will manoeuvre with speed and efficiency in an automotive industry undergoing rapid and fundamental changes.”
New technologies include electrified engines, autonomous driving and connectivity. Both brands are strong on small-car technology, with significant overlap in Europe.
Mr Manley said that the convergence of platforms would be “an early target” that will likely take two years to achieve.
The company will be legally based in the Netherlands, and traded in Paris, Milan and New York. The executives played down the significance of the new entity’s name and headquarters location, but both are symbolic choices that go a long way to signalling who is in the driver’s seat, where engineering and management brains will be based, and the relative imporFIAT tance of each entity in the new company.
The French and Italian governments as well as unions will be on the look-out for the responses, given the national significance of the car industries to both economies. The French government helped bail out PSA Peugeot in 2014 and owns a 12% stake in the company through the state investment bank.
While the merger of Fiat and Chrysler has been a success, the history of car mergers is littered with failed tie-ups. For example, the Daimler-Chrysler merger foundered on cultural differences between the German and US entities.