Currently reading: PSA Group and Fiat Chrysler confirm merger plans
The two firms confirm 50/50 union to create one of world's largest automotive groups
Rachel Burgess
News
3 mins read
31 October 2019

The PSA Group and Fiat Chrysler Automobiles have confirmed plans to merge on a 50/50 basis, firming up yesterday’s news that the two companies were in discussions regarding such a move.

Both firms said today that the discussions would be finalised “in the coming weeks” to reach a binding Memorandum of Understanding, which will create one of the world's largest automotive groups.

They added that the “combined entity would leverage its strong global R&D footprint and ecosystem to foster innovation and meet these challenges with speed and capital efficiency”.

The likely merger will create a car giant worth around £40 billion and encompass some of the world’s biggest car brands. FCA owns Fiat, Jeep, Alfa Romeo, Maserati, Ram, Lancia and Chrysler, while the PSA stable includes Peugeot, Citroën, DS and Vauxhall-Opel.

The deal would create the fourth largest car manufacturer globally in terms of annual sales, at 8.7m vehicles, behind Volkswagen Group, Toyota and the Renault-Nissan-Mitsubishi alliance, as well as revenues of €170bn (£147bn) and recurring operating profit of over €11bn (£9.5bn).

Today’s announcement also stated there are estimated synergies of €3.7bn (£3.14bn) synergies annually “without any plant closures resulting from the transaction”. This would come from a more efficient allocation of resources for major investments in  vehicle platforms, powertrain and technology as well as purchasing power. The two firms projected that 80% of the synergies would be achieved after four years. 

The shareholders of FCA and PSA will each take a 50 per cent stake in a new Dutch parent company, under the proposals, with the governance structure balanced between the two firms. There would be 11 board members, with five nominated by FCA and five by PSA. Current FCA chairman John Elkann will become the chairman of the new firm, while PSA group boss Carlos Tavares would become the CEO, standing on an initial five-year term.

PSA Group chief Carlos Tavares is famous for cutting costs - for example, turning Vauxhall into profit in under 12 months of taking ownership - and PSA and FCA claimed the merger would make “among the highest margins in the markets where it would operate,” based on FCA’s strength in the Americas and PSA Group’s in Europe.

As well as broadening the global reach of both firms, the merger will also mean the new entity will comprehensively cover all areas of the market including luxury, premium, volume, trucks and light commercial vehicles.

PSA Group boss Carlos Tavares said: “This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity. I’m pleased with the work already done with Mike and will be very happy to work with him to build a great company together.”

FCA chief Mike Manley said: "I'm delighted by the opportunity to work with Carlos and his team on this potentially industry-changing combination. We have a long history of successful cooperation with Groupe PSA and I am convinced that together with our great people we can create a world class global mobility company."

FCA has already been in the news this year regarding mergers. It held extended talks with Group Renault over a possible partnership but those talks broke down after the two firms could not reach an agreement, thought to be hampered by Renault’s alliance with Nissan and the French government.

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Tavares led the purchase of Vauxhall-Opel and has been keen to expand the firm for some time, either through partnership or further acquisition. PSA is understood to have previously looked at buying Jaguar Land Rover.

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pablovski123 31 October 2019

A lot of talk that Vauxhall UK could suffer...

Uk government should threaten to boycott any FCA/PSA imports - that would wipe 400k of unit sales off their books, then they'd think twice. The rest of Europe has been protectionist for years, France in particular, now play them at their own game and see how they like it. 

dessie 31 October 2019

Could be good

In a strange world this might be very good news ......for some vauxhall people, those that build vans and light commercial at luton. It would make sense to centralise all manufacturing of cv in one place ..as PSA already has set about doing. FCA only really has small number of Fiat vans so could add those to mix.

Takeitslowly 31 October 2019

dessie wrote:

dessie wrote:

In a strange world this might be very good news ......for some vauxhall people, those that build vans and light commercial at luton. It would make sense to centralise all manufacturing of cv in one place ..as PSA already has set about doing. FCA only really has small number of Fiat vans so could add those to mix.

 

What is this small number of which you speak?

scotty5 31 October 2019

It's Brexit to blame.

It's being reported on BBC that unions are worried the merger will have an impact on Vauxhall in the UK and needless to say, the word BREXIT gets a mention.

In anticipation that will be the next news story regarding the merger here on Autocar, I'd just like to point out once again that when anything negative is discussed the word "brexit" gets a mention but when anything positive is mentioned such as profits at Jaguar or investment in vast new buildings, Brexit doesn't get a mention.

One of these days someone is going to realise that Joe Public isn't stupid. If the merger does have an impact on Vauxhall it's because of the Fiat / PSA deal and nothing to do with Brexit. Chances are if we do leave Europe then a deal will be in place but no doubt Brexit will still be blamed. 

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