PSA and Fiat merger: on the way to the world’s 4th largest automotive group

The Fiat alliance and the PSA group. Illustrative photo. (JEAN-FRAN? OIS FREY / MAXPPP)

Barring a dramatic twist, the alliance announced at the end of 2019 between the French manufacturers PSA, Peugeot – Citröen and the Italian-American Fiat-Chrysler will therefore be recorded during an extraordinary general meeting of shareholders on Monday January 4. One of the last obstacles was lifted at the end of December: the European Commission gave its approval, on condition that the two groups preserve competition, especially with regard to small utilities. VSe will be the world’s 4th largest automotive group, behind Volkswagen, Toyota, Renault-Nissan. This giant will bring together more than 400,000 employees, weigh 170 billion euros in turnover, and build 8 million vehicles per year (based on 2019 data). It will be called Stellantis.

In a messed up market, this fusion must make it possible to better face the major challenges of the automotive industry: such as the switch to electric and clean vehicles, to autonomous driving. These technological transformations require massive investments: the merger will create economies of scale: PSA and Fiat are betting on 5 billion euros in savings per year. Le all without factory shutdown.

But a merger is always a bit risky, especially since it concerns companies of different nationalities. Beware of culture shock. And there are always risks of rivalry, especially since PSA will have a small advantage, Carlos Tavares, the boss of PSA will lead the whole. Finally, brand management will be tricky, Cafter PSA, there is DS, Opel, on the Fiat – Chrysler side, there is Jeep, Maserati, Alpha Romeo, and others. Fourteen in total, that’s a lot, some may be deleted, it remains to be seen which ones! In order not to upset anyone, but also to pay less taxes, the new entity will be based in the Netherlands but will remain listed in Paris, Milan and New York.

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