Merger creates world’s fourth largest car maker
FCA and Groupe PSA boards approve deal FCA boss hails move as ‘potentially industry-changing’
FIAT Chrysler Automobiles (FCA) and Groupe PSA – the parent company of Peugeot, Citroen and Vauxhall – are to merge, creating the world’s fourth largest car firm by sales volume. The decision has met with approval from both firms’ boards, with a legally binding memorandum of understanding set to be signed “in the coming weeks”. The news comes just five months after merger talks between Renault and FCA fell through.
FCA and PSA will build 8.7 million vehicles annually – behind only the Volkswagen Group, Toyota and the Renault-Nissan-Mitsubishi Alliance – and generate projected profits of 11billion Euros (£9.5bn) on annual revenues of 170bn Euros (£146.4bn). The union will provide Groupe PSA with opportunities in the lucrative North American market, and give access to customers catered for by FCA’s Alfa Romeo and Maserati brands.
FCA would also strengthen its position in Europe, while benefitting from PSA’s newer vehicle architectures and electric propulsion tech. The pair intends to work on connected and autonomous vehicles, too. Ownership of the merged firms would be split 50-50 between the companies’ shareholders.
Car manufacturers are increasingly seeking business synergies and mergers as markets become ever-more competitive and crowded, and regulations continue to make the future of automobile production and use uncertain. In April this year, FCA confirmed it would link up with Tesla to share the EV maker’s ‘pool’ of CO2 emission credits in order to comply with EU regulations. Ford, meanwhile, will use Volkswagen’s MEB platform to build electric cars from 2023.
FCA sold 4.84 million vehicles in 2018, on which profits of 5bn Euros (£4.3bn) were generated – an increase of 34 per cent on 2017. Groupe PSA, meanwhile, sold 3.88 million vehicles last year, making 3.295billion Euros (£2.84bn)
– up 40.4 per cent on 2017’s figures.
FCA CEO Mike Manley called the merger “potentially industry-changing”, while PSA CEO Carlos Tavares said the move “opens a bright future for the combined entity”.
“Ownership of the merged firms would be split 50-50 between the shareholders”