Fiat talking to Peugeot

Italian-American firm Fiat Chrysler Automobiles has confirmed it is in talks with French rival PSA — which owns Peugeot, Citroen, Opel and Vauxhall — over a tie-up to create one of the world’s biggest car makers.

It is Fiat Chrysler’s second bid this year to reshape the global car industry as it faces challenges with the transition to electric and autonomous vehicles.

A deal between the two car manufacturing groups would create a business with a combined market value of around $50 billion (NZ$78.4b).

A statement said ongoing discussions were “aimed at creating one of the world’s leading mobility groups”, but did not specify whether the goal was a full merger or a looser alliance.

Fiat Chrysler has been looking for a partner to help shoulder investments in the capital-heavy industry. Pressure has mounted on the sector as carmakers face a slowdown in global demand, mainly caused by the unpopularity of diesel vehicles, stigmatised as being dirty.

As well as coping with declining sales, manufacturers need to invest in developing plug-in EVs, cleaner technology and selfdriving systems.

A merger of the groups would bring under one roof Abarth, Alfa Romeo, Chrysler, Citroen, Dodge, Fiat, Jeep, Lancia, Maserati and Citroen, DS Automobiles, Peugeot and PSA’s most recent acquisitions Opel and Vauxhall (bought from General Motors in March 2017 in a deal worth €2.2 billion (NZ$3.8b)).

These latest talks follow a failed attempt by FCA to tie-up with Renault. That was scuppered by the French Government’s concerns over the role of Renault’s partner Nissan.