FCA, PSA make merger talks official

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.Β 

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 Β£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 β€œbased on any plant closures” - which, for now, ought to smooth the ruffled brow of 400,000 workers worldwide. Indeed, Tavares said that β€œthis 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…

P.H. O'meter

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Comments (51) Join the discussion on the forum

  • simonrockman 31 Oct 2019

    What makes VW work so well is that it's a master of platforming. Up/Citigo/Mii are the same car with three different identities.

    FCA has never managed this. we don't get Fiat/Chrysler/Alfa/Lancia in the same way. Its internal platform sharing is more akin to the MX-5/124 than the adroitness with which VW does it.

    When I was at Motorola I mapped the VW platform sharing as an example of how it should be done, and how Nokia had such a cost advantage over us. I was amused some years later to discover Nokia had also used VW as an example.

    There are only benefits in an FCA/PSA deal if the two companies can get on top of their brands (and please bring Lancia back with a new Fulvia) and make the sharing work.

  • nickfrog 31 Oct 2019

    I guess the critical mass for volume car makers is around 10m vehicles globally now so they wouldn't be very far off.

    If this happens, Renault will be quite upset that one of their share holders halted discussions with FCA a few months ago...

  • Krikkit 31 Oct 2019

    simonrockman said:
    What makes VW work so well is that it's a master of platforming. Up/Citigo/Mii are the same car with three different identities.
    PSA have always done well with platform sharing - hopefully they can make it work with Opel and Fiat etc in there as a group too.

    This is a good bit of news imho, all these brands are worth having around as they have and do make some great cars.

  • AlexHat 31 Oct 2019

    With the Peugeot 208 platform also underpinning the new Corsa (and I assume at somepoint the C3) it would make sense for a new Punto (if they want to make one instead of another 500 version) to use the same platform. Also good for Alfa if they want to go back into the supermini sector

  • janesmith1950 31 Oct 2019

    My understanding is they're way behind on EV and so need to hook up in an attempt to catch-up.

    Plenty of time for the deal to fall through, as France wants to be the boss and Italy wants to be the boss, despite PSA paying a circa 32% premium for FCA in a '50/50' merger.

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