You don’t have to be an economics expert to understand the merits of mergers in the car industry. The Volkswagen Group and Renault-Nissan are the first and third largest car companies in the world thanks to their multi-brand approach - and now it looks like another arranged marriage is on the cards. Together, Fiat Chrysler Automobiles and Groupe PSA anticipate a combined revenue of €170bn and a sales volume of some 8.7m cars. That would be sufficient to make it the fourth largest automotive firm in the world.
If all goes according to plan, it will be Carlos Tavares at the helm, who’s overseen the PSA Group’s growth into an international force and headed the purchase of Vauxhall and Opel from GM for £1.9 billion in 2017. Proven at PSA, it’s possible that Tavares is the man to fill the enormous void left by the late Sergio Marchionne at FCA. Expect the 61-year-old to focus on bringing some consistency to the sales performance of Fiat’s diverse portfolio using shared research and development that have been rolled out at PSA in recent years.
Things are set to get going quickly, too, with 80 per cent of the merger expected to be complete in just four years’ time, meaning the brands of this new Fiat-Peugeot company could start to get shared platforms to underpin their products of the mainstream, premium, SUV and commercial segments in the middle of the new decade. The sharing of powertrains and production lines should happen even sooner. That might help the new FCA/PSA company make up ground to the seemingly uncatchable VW Group, which remains a global automotive juggernaut even in the wake of Dieselgate.
Typically such a merger would herald the closing of extraneous factories and a slimming of some workforce, but with notoriously volatile French (and, on the other side, American) employees to placate, both PSA and FCA have denied such losses would be necessary. The official word is that none of the changes will be “based on any plant closures” - which, for now, ought to smooth the ruffled brow of 400,000 workers worldwide. Indeed, Tavares said that “this convergence brings significant value to all the stakeholders and opens a bright future for the combined entity”. Hopefully that includes the more extensive use of Maserati’s racey Trofeo V8 and Alfa Romeo’s terrific Quadrifoglio V6…