Stellantis will be the world’s fourth largest automaker.
The European Union (EU) approved the $38 billion merger of France’s Groupe PSA with Fiat Chrysler Automobiles to form Stellantis Holding Company this week. The corporation will comprise the second biggest automaker in Europe to Volkswagen AG, and will be the fourth largest on the planet in terms of volume. However, it’s not quite official just yet.
The final hurdle for this new merger is the shareholders. They will vote for this merger at the end of January 2021. If that vote goes through, here in the U.S. what would formerly be Fiat Chrysler will surpass both Ford and General Motors.
We won’t see more vans from the deal
There are conditions to this merger that the EU was concerned about; namely, commercial vans. PSA addressed this by offering to increase production at its joint-venture operation with Japan’s Toyota. PSA is willing to sell these commercial vans at close to cost.
“We can approve the merger of Fiat Chrysler and Peugeot SA because their commitments will facilitate entry and expansion in the market for small commercial vans.”
European Commission Vice President Margrethe Vestager
A mixed blessing?
Many insiders feel this merger is a bit of a mixed bag for both sides. FCA brings in big hitter brands like Ram and Jeep to the fold. They are also bring in questionable brands such as Fiat and Chrysler (among others). Peugeot’s underperforming DS is also a bit of a worry. The group is targeting $6 billion in annual operating cost cuts, while updating their fleets.
Gains for consumers may consist of higher tech vehicles, more EV options, greater distribution and a deeper pool of resources. A major issue that need to be addressed is consumer confidence in quality. This has been an issue for FCA and PSA.
“Based on the assessment of the indicators under IFRS 3 (International Financial Reporting Standards) accounting standard and consideration of all pertinent facts and circumstances, FCA and PSA’s management determined that Peugeot S.A. is the acquirer for accounting purposes,”
Stellantis in a written statement
PSA chief executive Carlos Tavares will be CEO of the combined company, and FCA CEO Mike Manley has been named Head of Americas.
The bottom line is that, despite the pandemonium of 2020, the $38-billion Stellantis Holding Company partnership is the largest automotive deal of the year. Stay tuned for more updates soon.
