Groupe PSA and FCA agree to merge
18 December 2019
Fiat Chrysler (FCA) and PSA Group signed a binding Combination Agreement providing for a 50/50 merger of their businesses to create the 4th largest global automotive OEM by volume and 3rd largest by revenue.
The combined company will have annual unit sales of 8.7 million vehicles, with revenues of nearly €170 billion, recurring operating profit of over €11 billion and an operating profit margin of 6.6% (2018 results). The new Group will derive 46% of its revenues from Europe and 43% from North America. The list of vehicle brands would include Fiat, Jeep, Dodge, Ram, Maserati, Peugeot, Opel and DS.
As a result of the merger, the companies intend to reduce costs by €3.7 billion—without closing any manufacturing plants. Some 40% of the savings would come from technology, product and platform-related expenses, 40% from purchasing and 20% from other areas, such as marketing, IT and logistics.
Completion of the proposed combination is expected in 12-15 months, subject to customary closing conditions, including approval by shareholders and the satisfaction of antitrust and other regulatory requirements. The merger could help both companies to cope with the slowing vehicle demand and substantial costs of developing electric cars. However, trade unions—particularly in France, where social and labor unrest has been going on for months—will resist any move to reduce jobs.
Based on their sales volumes in 2018, the world’s largest carmakers were Volkswagen Group (10.8 million), Toyota (10.5 million), Renault–Nissan–Mitsubishi Alliance (10.3 million), General Motors (8.7 million), Hyundai Motor Group (7.5 million), and Ford (5.7 million). These sales figures may include both cars and light trucks.
Source: FCA