UPDATE 12/18/19: We thought the merger could prove to be an avenue for Peugeot’s return to the U.S., but PSA Group CEO Carlos Tavares put that on ice for now. “For the time being, we see the strength of FCA in North America, which is outstanding. We have 12 months ahead of us to think about what we do after closing [the deal]. This is something we will have to consider, and a decision will be made after closing. We all recognize FCA is not only a big player in North America, but also a highly profitable player in North America, which is a big reason for the combination of these two companies.”
Fiat Chrysler Automobiles and Peugeot (officially known as PSA Group) have officially sealed the deal on a 50-50 merger, creating the world’s fourth-largest automaker in the process. The merger brings some of the most recognizable global brands under the same umbrella, and establishes a combined company worth a reported $189 billion.
When they were separate, both companies teetered around the bottom of the top 10 in terms of size. Now, the new company expects to sell about 8.7 million vehicles annually. On that basis, they just leapfrogged Honda, Hyundai-Kia, Ford and GM. Even with handshakes and formal press releases, a new company name has yet to emerge. As an NPR report mentions, an FCA spokesperson said its “too early in the process to discuss a combined company name.”
What it means
In a joint release, both companies said there would be no shuttered plants resulting from the merger. Peugeot Group CEO Carlos Tavares will become the new company’s CEO, while FCA’s chairman John Elkann will become its chairman. “Our merger is a huge opportunity to take a stronger position in the auto industry,” Tavares said. “This is a merger between two healthy companies.”
The combined entity certainly has a wide range of brands under its umbrella. Here is what each side brings to the table:
|Fiat Chrysler brands||PSA Group brands|
Both companies wanted the 50-50 merger to reduce costs and share vehicle platforms and technologies across their lineups. FCA has a strong standing in North and South America, while PSA Group represents some of Europe’s most popular brands. The new company will be headquartered in the Netherlands, where FCA’s corporate headquarters is currently based. The parent company will be listed on the stock exchanges in Paris, Milan and New York.
New brands for America?
Over the next year, it’s likely both companies will hammer out how best to go about sharing resources for new models. However, we may not see new models, particularly from PSA Group brands, under this deal for some years to come, if it happens at all. The combined company will gather 43 percent of its revenue from North American sales thanks to FCA, with another 46 percent coming from Peugeot and PSA’s other brands in Europe.