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PSA group and Fiat Chrysler confirmed the merger becoming fourth largest carmaker

The PSA Group and the FCA (Fiat Chrysler Automobiles) have signed a merger deal on Wednesday, 18th December 2019, hence becoming the fourth largest car manufacturer in the World. The merger has a total of about 8.7 million sales and £144 billion (approx Rs 13.41 lakh crore) in combined revenue which puts the group after the position of the Volkswagen Group, Toyota, and the Renault-Nissan alliance

Both the companies had agreed upon the deal in the month of October 2019, but they have now entered a binding Combination Agreement. The process of the merger will happen over the next 12-15 months. The merged firms are saying that they will create a company with the “leadership, resources and such a scale so that to be at the forefront of a new era of sustainable mobility.”

It will prove to be an advantageous move for both companies as the merger will help the PSA group to get access to the American markets, and on the other hand, the FCA will be making the use of the PSA's potential newer, and electrified architectures of the vehicles.

This statement by both the brands has claimed that the merged PSA-FCA group will be allowing £3.1 billion (approx Rs 28,000 crore) in the ‘run-rate synergies’. This will be done through the efficiencies of the shared investments made in the “vehicle platforms, engine families as well as the new technologies”. The PSA-FCA group also stated that there will be no closures of plants because of this deal. This news came as a relief, especially to the workers in Ellesmere Port as the PSA group, had earlier threatened to close the operations of the Cheshire plant if any disruptions were to occur due to Brexit. A new name for the company will be announced in the coming months. 

Although no details of the firm have yet been announced, the PSA-FCA group did say that more than two-thirds of their products will be made on two platforms. These platforms include a small platform and a compact or a midsize platform, both of which will account for about three million cars every year. It is not yet confirmed but both the platforms may be the CMP and LMA2 platforms of the group. These are perfectly capable of running the combustion, hybrid and full electric powertrains.

The merged firms will also include some of the high-profile car brands. The brands owned by the PSA Group include the Citroën, DS, Peugeot, and Vauxhall-Opel. On the other hand, the FCA owns the Alfa Romeo, Chrysler, Fiat, Dodge, Jeep, Lancia, Maserati, and Ram.

The binding agreement of the PSA-FCA group will be focused on their core markets in Europe, North American, and Latin America. The statement also says that it. will be “reshaping their strategy in the other regions as well.” It has been discussed that both companies have not been able to gain a strong foothold in the Chinese market in the gone by years. 

The PSA has a strong position in the markets of Europe by its brands including Peugeot, Citroen and Vauxhall-Opel. On the other hand, the FCA has a strong position in the markets of North and Latin America as a result of the success of Jeep and majorly, the Ram Trucks.

As per both firms, The group will be more geographically balanced.

The deal will enable an increase in the investment efficiency in the “mobility solution as well as the cutting edge technologies”, which includes the electric vehicles and the autonomous systems. The PSA Group will soon launch some Electric Vehicles including the Peugeot e-208 and Vauxhall Corsa-e. The FCA is currently in the process of making the electric version of the Fiat 500.

The agreement between the companies confirms the structure of the management of the new company. Mr Carlos Tavares, head of the PSA group, will be taking the charge as the CEO of the merged firm, and Mr Johan Elkann will serve as the chairman of the merged entity. Mr Carlos Tavares said: “This will be exciting, this is going to be a once in a lifetime opportunity for me and I’m looking forward to supporting the formation of the merged entity.”

The finance ministers of France and Italy have been welcoming of the merger, but at the same time, making sure that it will be monitored closely that there is no adverse impact on the jobs in both the countries because of the merger.

Mr. Tavares had said in a statement that the merger represents “an immense opportunity for taking a stronger position in the auto industry as we are in the process of mastering the transition to a clean, safe and sustainable mobility environment and provide our customers with the world-class products, technology, and services.”

The FCA has a presence in India with the various models from its brands including the Jeep, Maserati, and Fiat. On the other hand, the PSA group will soon be entering the Indian auto market in the year 2021 with the Citroën brand. No such news is there currently as to how the PSA-FCA merger will be affecting any of the two brands' operations in India

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image source-Groupe PSA

 
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