The Detroit Free Press is reporting that Fiat Chrysler Automobiles (FCA) and that French automaker PSA Groupe, who is best known for the French car brand Peugeot, have struck a deal to merge the two companies. You might recall earlier this year, FCA was in talks about a merger with Renault-Nissan-Mitsubishi Alliance before walking out on talks. Now, it seems that FCA has found a partner to share development, technology, architectures, and the ongoing cost of regulatory compliance.
The merger would make the new company, the fourth-largest automaker in the world according to the Wall Street Journal (WSJ). The WSJ also confirmed that it looks like both companies have agreed on a merger agreement. The combined sales of FCA and PSA last year of 8.7 million vehicles, would outrank General Motors (GM) who had a global total of 8.4 million vehicles.
According to Reuters that a merger between FCA and PSA could create a “$50-billion giant better placed to tackle a host of costly technological and regulatory challenges facing the global auto industry.”
FCA released a brief statement Wednesday, “Following recent reports on a possible business combination between Groupe PSA and FCA Group, Fiat Chrysler Automobiles N.V. confirms there are ongoing discussions aimed at creating one of the world‘s leading mobility Groups. FCA has nothing further to add at this time.”
The proposed merger comes amid FCA’s negotiations with the United Auto Workers (UAW) over their new national contracts. However, it is doubtful that it will have an impact on the current talks between the two sides. But it will be raising a lot of questions for current FCA/UAW employees.
Sources are saying that a final deal is not certain just yet. We do know that all large mergers do take time and can face tons of regulatory scrutiny, as we have seen with global mergers in the past. Sources are also stating that it is likely, that the new company could have its headquarters located in the Netherlands while continuing with the current regional headquarters for operations in the U.S., Italy, and France.
Analysts have been stating that Peugeot has been looking at making a return to the U.S. market and that FCA’s current Chrysler/Dodge/Jeep/Ram (CDJR) dealer network might be a key element in the brand’s return. However, FCA’s own Italian-based brands (FIAT and Alfa Romeo) have struggled to gain traction. FCA has recently cut its best-selling FIAT vehicle, the Fiat 500 from its 2020 model year lineup and has been closing down many of its stand-alone FIAT studios and moving the FIAT brand into already secure CDJR dealerships. Could Peugeot fit into that equation? We honestly don’t think so.
We will continue to bring you more up to the date information about the purposed merger as it breaks. So stay tuned.
What do you think of the purposed merger? Leave your comments below.