It’s official: Fiat Chrysler Automobiles and Peugeot Group will combine to create a $50 billion enterprise, and become the world’s fourth-largest automaker. After talks with Renault Group fell through earlier this year, rumors surfaced that FCA may in fact merge with French automaker Peugeot instead. Now, the combined entity will be listed in Paris, New York and Milan according to a Reuters report. Peugeot’s Carlos Tavares will be CEO of the combined group, while FCA’s John Elkann will be chairman.
How does this look for both manufacturers?
The primary driver behind the FCA-PSA merger is shared costs and boosts to production. For its part, Fiat Chrysler will have access to Peugeot’s more modern vehicle platforms, a possible boon for aging brands like Chrysler. Europe-based Peugeot Group would see the benefit of FCA’s more profitable U.S. brands, including Jeep and Ram.
As it stands, Peugeot is also well ahead of FCA on electrification across its platforms.
Given the outcome of the Renault talks, analysts contended a tie-up with Peugeot was the most logical combination. Peugeot could, at last, have a viable route to return to the U.S. market, though that is not absolutely official yet.
The new combined entity has yet to receive a name, but will be registered in the Netherlands. However, there will also be headquarter locations and registered entities in Italy, France and the U.S.
Thursday’s merger now puts a wide range of brands under the same umbrella. FCA brings Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Ram and Maserati to the table. Peugeot has its eponymous brand, as well as Citroen, DS, Opel and Vauxhall. The two automakers sold 8.7 million vehicles last year. Finally, the companies said the merger would save about $4 million from “run-rate synergies” without closing plants.