Fiat-Chrysler Automobiles and Groupe PSA inked a 50-50 merger agreement that combines both entities into one. The resulting conglomerate will be the fourth largest automotive OEM by sales volume and third largest by revenue.
The proposed merger will aim to be an industry leader with the management, capabilities, resources, and scale to successfully capitalize on the opportunities presented by the new era in sustainable mobility.
FCA and PSA have been in merger talks since the second half of 2019, finally inking the agreement on 18th December.
While the press release says that global scale and resources will be owned by 50 percent Groupe PSA shareholders and 50 percent by FCA shareholders, analysts project that the dynamics of the merger could be more complicated than the perfect split that is being portrayed. With quite a few notable stakeholders including French and Italian governments along with the Agnelli and Peugeot families, the merger is sure to be a complex matter.
However, if all parties involved manage to address apprehensions and work out a satisfactory agreement, this will be one of the biggest developments in the automotive world for quite some time now. With its combined financial clout and skilled workforce, the FCA-PSA entity will find itself in an ideal position to provide industry-leading sustainable mobility solutions. This includes both the rapidly urbanizing environment and rural areas across the globe.
The gains in efficiency derived from larger volumes, along with combining the core competencies and strengths of Groupe PSA and FCA, will ensure the combined business can offer all customers best-in-class products, technologies, and services. Together, FCA-PSA will have annual unit sales of 8.7 million vehicles, with revenues of more than $188 billion, based on 2018 data.
The merger will retain all thirteen brands the two partners bring to the table.
The post-merger conglomerate will span the entire automotive segment spectrum, including luxury, premium, and mainstream passenger cars as well as SUVs, light trucks, and light commercial vehicles. FCA and PSA will leverage their respective market strengths in North America and Latin America, and Europe. 46 percent of the revenue is projected to be derived from Europe while 43 percent will be from the Americas.
FCA and PSA will also benefit from the efficiency gained by optimizing investments in vehicle platforms, engine families, and new technologies. The increased scale of operations will enable the partnership to enhance purchasing performance and create additional value for stakeholders.