Groupe PSA and FCA plan to merge, creating fourth-largest carmaker in the world

The 50-50 venture is expected to create new synergies and advantages from scale

Italian-American carmaker FCA and Europe’s Groupe PSA intend to merge in a 50-50 venture, potentially creating the world’s fourth-largest carmaker in terms of unit sales (8.7 mn cars) with revenue of €170 bn.

The deal will allow Groupe PSA to leverage FCA’s strong reach in the USA — a market where they’re conspicuously absent, while FCA gets access to PSA’s formidable presence in Europe.

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FCA remains present in India with their Jeep brand, while PSA expects to enter the country with the Citroën brand shortly. FCA brands include Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, Maserati, and Ram Trucks, while PSA brings Peugeot, Citroën, DS, Opel and Vauxhall brands to the table.

With increasingly stringent emissions and safety norms, automakers must invest significantly to keep up and continue selling relevant products. The FCA-PSA merger will likely help in this regard with platform-sharing (with multiple products across brands using the same underpinnings), as well as with investments to be made in electrification, autonomous vehicles and connected technologies.

The release claimed, “approximately €3.7 bn estimated annual run-rate synergies without any plant closures resulting from the transaction”, indicating direct benefits before any cost-cuts. The combined group will have balanced representation on the board, with John Elkann as Chairman and Carlos Tavares as CEO.

This is not the first time FCA has scouted for a partner, having previously explored a partnership with Renault of France. FCA itself is a product of an amalgamation. Closer to home, Ford and Mahindra have formed a joint venture which will result in distribution and marketing synergies, as well as co-developed SUVs and MPVs.

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