Fiat Chrysler Automobiles and PSA Groupe merge to create world’s fourth largest automaker

Paris-based PSA Groupe and Italian-American corporation, Fiat Chrysler Automobiles have inked a merger deal that is set to create the world’s fourth largest automaker (in terms of unit sales) behind the Volkswagen Group, Toyota Group and the Renault-Nissan alliance. Globally, PSA Groupe owns Peugeot, Citroen, DS and Vauxhall-Opel brands while FCA’s subsidiaries include Fiat, Chrysler, Dodge, Jeep, Ram, Maserati, Abarth and Alfa Romeo.

Why the FCA-PSA merger?

A global slowdown in auto sales, trade wars, an expensive shift towards stricter emission norms and electrification are some of the major reasons that are pushing automakers to ink merger deals lately. Both, PSA Groupe and Fiat Chrysler are lagging behind on investments and neither do they have a strong presence in Asia. Together, they can pool their resources on platform development, manufacturing and technological exchange to create future proof cars for their markets around the globe. The merger would create the second largest automaker in Europe and would create a strong and competitive rival to Volkswagen AG, who currently leads in global as well as European car sales.

Merger valued at almost USD 50 billion

According to a report by Bloomberg, the shareholders of both companies are set to own 50 per cent of the combined entity. FCA investors would receive a dividend of EUR 5.5 billion while PSA would distribute its stake in French automotive supplier Faurecia SE, worth about EUR 3 billion, to shareholders. The new company will be headquartered in Netherlands and its board will have 11 members, six from PSA including CEO Carlos Tavares. FCA Chairman John Elkann too would be engaged in a leading role in the enlarged group. Earlier, FCA and Renault had shown interest in a merger, but talks collapsed in June after a round of negotiations between the two companies.

PSA Groupe is the parent company of the upcoming Citroen brand in India and their first car for our market, the C5 Aircross is slated to arrive at our shores in the second half of 2020. Meanwhile, FCA India is currently in charge of selling Fiat as well as Jeep vehicles in our country.