Car giants merge to face ‘new era’
The boards of Fiat Chrysler and PSA Peugeot have announced fast-moving plans to merge the two companies creating the world’s fourth-largest vehicle maker with enough scale to confront “the new era in mobility”.
The merger would bring together Italian-American Fiat Chrysler, with its strong footprint in North America where it makes at least two-thirds of its profits, and France’s PSA Peugeot, the number two maker in Europe.
Both lag in China, despite the participation of the Chinese shareholder Dongfeng in PSA Peugeot, and are catching up in the transition to electrified powertrains.
The 50-50 merger is expected to create synergies of 3.7 billion euros (£3.2 billion), a figure the firms said they expect to achieve without any factory closures – a concern of unions in the UK, France and Italy where the makers have more model overlap.
The new company would have combined revenues of 170 billion euros (£146 billion), an operating profit of over 11 billion euros (£9.5 billion) and produce 8.7 million cars a year – behind Toyota, Volkswagen and the Renault-Nissan alliance.
Once a merger is finalised, PSA Peugeot CEO Carlos Tavares will be chief executive of the new company with Fiat Chrysler chairman John Elkann taking over as chairman.
“This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity,” Mr Tavares said in a statement.
The firms said the new company would be able to meet the challenges of powertrain electrification, connectivity and autonomous driving “with speed and capital efficiency”.
The combined company will be able to share in the cost of developing those technologies with their “strong global R&D footprint”, they said, adding that will also save on investments in vehicle platforms and save money with greater purchasing power.