Two of the most well-known names in the automotive industry are becoming one. Peugeot S.A…. also known as Groupe PSA… and Fiat Chrysler Automobiles have agreed to merge. They’re equal partners in the deal. Combining a French based company with an Italian-American multinational corporation will create the fourth largest global OEM by volume and third largest by revenue. The merged companies are expected to produce annual sales of 8.7 million units and combined revenues of nearly $189 billion. 46% of revenues will come from Europe and 43% will be generated by sales in North America. This comes a little more than six months after Fiat Chrysler Automobiles’ proposed merger with French automaker Renault fell through.
One of the benefits of any merger is combining resources. In the auto industry that usually means sharing vehicle platforms, engines and technology. In this case, FCA says “more than two-thirds of run rate volumes will be concentrated on 2 platforms, with approximately 3 million cars per year on each of the small platform and the compact/mid-size platform”. The merger runs the gamut of vehicles from luxury brands like Alfa Romeo and Maserati to the compact PEUGEOT 108. They’ll be sharing more than hardware. Like every other automotive company, they’ll be combining forces to develop sustainable mobility, autonomous driving and connectivity. FCA says “these synergy estimates are not based on any plant closures resulting from the transaction”.
A Dutch parent company will oversee this new automotive giant. As with any merger, both companies’ shareholders and regulators must approve the deal. That’s expected to take up to 15 months.