Fiat Chrysler, PSA Group confirm merger
With this merger, the new company, with an annual sales volume of 8.7M, will cover all segments of the market including premium, luxury, volume, light commercial vehicles, and trucks.
Putting all speculations to rest, Fiat Chrysler Automobiles (FCA) and the PSA Group have officially confirmed that they will be merging their businesses.
The resulting brand will have an annual sales volume of 8.7 million vehicles. Based on their 2018 results, the combined revenues of the PSA-FCA Group will be around €170 billion, and it will record a recurring operating profit of over €11 billion.
FCA and PSA have confirmed that a Memorandum of Understanding will be signed in the coming weeks. No manufacturing plants will be shut as a result of this transaction, they announced.
The move will enable the two giants to efficiently allocate resources for major investments in powertrains, vehicle platforms, and R&D. The two groups have also projected that 80% of the synergies would be achieved after four years. The total one-time cost of achieving the synergies is estimated at €2.8 billion.
Speaking about the move, the new CEO of the combined company, 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 I will be very happy to work with him to build a great company together.”
The deal is expected to create a new global OEM giant, which will be the fourth-largest in terms of volumes behind Volkswagen Group, Toyota, and the Renault-Nissan-Mitsubishi alliance. PSA and FCA have also claimed that the combined company would realise among the highest margins in the markets in which it will operate.
At the moment, it is unclear what the new company will be called. It will encompass brands as diverse as FCA’s Jeep, Ram, Dodge, Chrysler, Fiat, Alfa Romeo, and Maserati and PSA's Peugeot, Citroen, Opel, Vauxhall, and DS Automobiles.
This move comes after the sudden passing of FCA’s former CEO Sergio Marchionne, last year. Envisioning a more consolidated automotive industry, he had unsuccessfully sought partnerships with General Motors and Volkswagen.
