Fiat Chrysler, Peugeot OK merger they need to survive

New company, to be called Stellantis, will employ 400,000.

Shareholders of Fiat Chrysler Automobiles and PSA, the French maker of Peugeot, Citroën and Opel cars, voted Monday to merge in an effort to acquire the scale necessary to survive in an industry gripped by technological change and pummeled by the pandemic.

The new company, to be called Stellantis, will employ 400,000 people and i nclude t he Jeep, Ram Trucks, Alfa Romeo and Maserati brands. I t would be the world’s fourth- largest carmaker, after Toyota, Volkswagen and the Renault- Nissan- Mitsubishi Alliance, based on vehicle sales during the f i rst nine months of 2020.

Executives of Fiat Chrysler and PSA agreed at the end of 2019 to merge and have been working out the details and securing regulatory approval since then.

Together, the two companies believe they stand a better chance of surviving a transition to electric vehicles, which is happening faster than most analysts predicted.

“We are living through a profound era of change in our industry,” John Elkann, chairman of Fiat Chrysler, told shareholders by video .“We believe the coming decade will redefine mobility as we know it .”

The new company, which will be based in the Netherlands with large operations in France, Italy and the United States, will face major challenges. Neither

Fiat Chrysler nor PSA has a strong presence in China, the world’s largest car market , and t hey have been slow to introduce electric vehicles.

The two companies have some assets, such as t he popular Jeep and Ram brands, said Peter Wells, a professor at Cardiff Business School in Wales. But they also have grave problems, such as underused assembly lines, which will make it difficult for them to fulfill promises to unions and the French government, a major shareholder, not to close factories.

P SA and Fiat Chrysler “have a bunch of st ructural problems that aren’t going togo away easily ,” Wells said.

Fiat and PSA have been hard hit by the pandemic. PS A’ S vehicle sales were down 30% in the 11 months through November, while Fiat Chrysler sold 30% fewer cars and trucks in the nine months through September, the most recent reporting period.

The damage wrought by t he pandemic prompted the companies to adjust the terms of the merger in September. A special dividend to Fiat Chrysler shareholders, to be paid when the deal closes later in January, was cut to $ 3.6 billion from $ 6.8 billion. In return, Fiat Chrysler shareholders will get a bigger slice of possible future payouts.

Carlos Tavares, chief executive of PSA, will hold the same title at the new entity. Elkann is in line to be chairman. Mike Manley, chief executive of Fiat Chrysler, will manage the combined company’ s U.S. operations.