Fiat Chrysler and PSA Group announce intent to merge automakers

The American-Italian automaker will combine forces with the French automaker for one massive conglomerate.

Sean Szymkowski
It all started with Gran Turismo. From those early PlayStation days, Sean was drawn to anything with four wheels. Prior to joining the Roadshow team, he was a freelance contributor for Motor Authority, The Car Connection and Green Car Reports. As for what's in the garage, Sean owns a 2016 Chevrolet SS, and yes, it has Holden badges.
Sean Szymkowski
3 min read
PSA-FCA merger announcement

Shortly following reports that American-Italian automaker Fiat-Chrysler and France's PSA Group were in discussions to complete a merger, both automakers confirmed such decision. Just days later, both boards have officially approved the action.

On Thursday, FCA and PSA announced an agreement, a plan to merge and to create a new automaker unit that's 50% owned by both parties. To be clear, this is not a final confirmation that the two will absolutely merge, as the deal will be subject to regulatory approval in numerous countries, but if talks have progressed this far, it's nearly all but certain.

The deal comes months after FCA shocked the industry and said it pursued a tie-up with rival French automaker, Renault. However, the US automaker pulled out of the deal following pushback from the French government (a major Renault shareholder) and the automaker's alliance partner Nissan. It's understood discussions with PSA began shortly after the Renault deal fell through.

The combined automaker will operate a wide spread of brands. On FCA's side, it brings Chrysler , Dodge, Jeep and Ram. , Alfa Romeo and Maserati are also part of the FCA family. PSA operates brands most American consumers likely don't recall after an early-1990s exit from the US market. Peugeot, Citroen, DS, Vauxhall and Opel hail from the French automaker. The latter two were formally under General Motors' umbrella and rounded out its now-deceased European operations.

In the merger plan announcement, FCA and PSA said it's estimated this marriage will result in cost savings of over $4 billion annually -- a figure that does not include plant closures. Combined estimated revenues, based on 2018 figures would hover around $190 billion and operating profit is an estimated $12.2 billion.

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Heading this proposed auto giant would be current PSA CEO Carlos Tavares, while it's unclear where FCA CEO Mike Manley would land in the new operation. A new board of directors would include 11 individuals and current FCA Chairman, John Elkann, would keep his role in the new company. Including Elkann, FCA would nominate five board members, while PSA would appoint the other five to create the 11-strong board.

Both current CEOs provided statements of delight over the merger agreement. "This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity," Tavares said. "I'm pleased with the work already done with Mike and will be very happy to work with him to build a great company together."

Manley added, "I'm delighted by the opportunity to work with Carlos and his team on this potentially industry-changing combination. We have a long history of successful cooperation with PSA Group and I am convinced that together with our great people we can create a world class global mobility company."

As for what the combined entity will mean for global markets, it's good news for both parties on paper. FCA remains strong in North America; PSA is absent from the market. Meanwhile, FCA has struggled to turn around its European operations, which is where PSA remains highly competitive. Both companies could combine resources to better tackle the world's largest auto market, too: China.

PSA had already put in place a plan to return to North America by 2026 with its Peugeot brand. However, with a pending FCA merger, we could see this launch occur at a speedier rate with access to US dealerships. One thing is certain: after years of courting, FCA has finally found its partner.

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