PSA And FCA merger agreed
PSA And FCA merger agreed
Posted on November 4, 2019
After what were apparently extensive negotiations, two of the world’s most recognizable automakers are merging. Groupe PSA and FCA have agreed a 50/50 merger which will create the fourth largest automaker in the world.
Groupe PSA owns Peugeot, Citroen, DS Automobiles, Opel, Vauxhall and Free Move 2. As a reminder, FCA owns Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Jeep, Lancia, Maserati, Mopar, Ram and SRT. The two combined include some of the world’s most well-known car brands.
You may remember rumours of talks between FCA and Renault that failed earlier this year. It seems PSA were more open to consolidation. The French government were blamed for the failure of talks with Renault. They own 15% of Renault and wanted to work with the Japanese rather than the North Americans. Despite also owning 12% of PSA, the French government did not try to stop this deal.
"The Supervisory Board of Peugeot S.A. and the Board of Directors of Fiat Chrysler Automobiles N.V. have each unanimously agreed to work towards a full combination of their respective businesses by way of a 50/50 merger," the companies said in a press release.
"In a rapidly changing environment, with new challenges in connected, electrified, shared and autonomous mobility, the combined entity would leverage its strong global R&D footprint and ecosystem to foster innovation and meet these challenges with speed and capital efficiency," FCA and PSA said.
Two become one
Consolidation is the name of the game right now. Big brands snap up small ones and huge brands seek to partner with other huge brands in order to save money, combine research resources and work faster and for less. The speed at which technology is changing and developments are expected to hit production is increasing all the time and very few individual automakers have the resources to handle that.
Plus, a merger like PSA and FCA leverages the strengths of each. PSA is huge in Europe where FCA has traditionally struggled. PSA doesn’t have much presence in North America where FCA thrives. The two will be able to benefit from each other’s successes while hopefully minimizing each other’s losses.
For example, PSA bought Opel and Vauxhall from General Motors who had spent ten years trying to make them profitable. PSA turned a profit in just over 2 years. It is this kind of business that can make or break an automaker.
The deal has only just been announced and the fine detail probably not yet agreed. That means it’s way too early to wonder the effect this news will have on the FCA brands we know and love. Don’t expect to see many, if any, changes to the Ram or Jeep lineup for a while yet as it takes years for these consolidations to percolate through.