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FCA-PSA: Birth of the world’s 4th largest carmaker

18. 12. 19.

FCA-PSA: Birth of the world’s 4th largest carmaker

The Board of Directors of Fiat Chrysler Automobiles (FCA) has approved a merger with the PSA Group to create the world’s 4th largest carmaker.

FCA and PSA announced this morning that they have signed an agreement on the merger of their two groups.
 


The new entity will form the world’s 4th largest carmaker (behind Volkswagen, Toyota and the Renault-Nissan-Mitsubishi Alliance), with a stock market value of around 46 billion dollars, exceeding that of Ford. Based on the results for 2018, the new group will sell around 8.7 million vehicles a year and have a turnover of 170 billion euros, profit of 11 billion euros and an operating margin of 6.6%. This merger also brings together two iconic dynasties of the car world: the Agnelli clan and the Peugeot family.
 

Unveiled about 6 weeks ago, the merger plan centres round a Dutch holding company. Operational management will be provided Carlos Tavares, CEO of PSA, for a 5-year term of office while John Elkann, existing chairman of FCA, will take over the chairmanship.

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The Group will keep Fiat, Jeep, Dodge, Ram, Chrysler, Alfa Romeo, Maserati, Peugeot, Citroën, DS, Opel and Vauxhall. The portfolio covers the generalist, premium and utility vehicle sectors.
 

For PSA, this merger opens the door to North America, while for Fiat it offers great inroads into the development of low-emission technologies. But it does not rectify the faults common to both groups: the lack of a real foothold in the premium market with a brand capable of generating volume and a substantial margin as well as a strong position in the Chinese market.
 

The merger process should take between 12 and 15 months, the time required for the respective shareholders, as well as the competition authorities, to give their approval.