Fiat Chrysler and Groupe PSA reportedly in merger talks
An international news outlet has reported that Fiat Chrysler and Groupe PSA, makers of Peugeot and Citroen cars, are in talks over a possible merger. If this deal come through, the combined entity will be worth over $ 50 billion. The entity will bring brands like Jeep, Chrysler, Fiat, Alfa Romeo, Maserati, Peugeot, Citroen, Opel and Vauxhall under one roof.
This is FCA's second attempt at finding a partner in the last year. It was earlier in talks with another French carmaker, Renault, but political pressures meant the talks were a dud. It is expected that this deal will also face many political, managerial and financial challenges. John Elkann, Chairman of FCA is expected to continue in this position in the merged entity while PSA head Carlos Tavares will continue as CEO. PSA's supervisory board is expected to meet today, October 30, to discuss this deal.
As with most such deals, this is expected to allow the two firms to share engines, architectures and production capacity. More importantly, this will also allow the two firms to more efficiently co-develop new technology around electric vehicles, on-board connectivity and autonomous driving.
The rationale behind this move is quite clear. car sales are dropping across established markets like the US, Europe and China. Further, companies are having to invest heavily on new tech like EVs and autonomous driving in the face of changing global trends. This impact will be greatly reduced when collaborations like this happen. Numerous carmakers are already working together to this end. Further, this particular deal will give FCA strong presence in Europe while easing PSA's re-entry into the US market. Incidentally, in India PSA is set to debut next year with the Citroen brand while FCA has had a long association with the country.
Source: Wall Street Journal