FCA and PSA announce merger: a single company will be the 4th largest in the world and the 3rd largest in revenue

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The information that two automobile concerns – Fiat Chrysler Automobiles and PSA Group – plan to merge, appeared at the end of October this year. As expected, the parties signed the documents before the end of this year: a message appeared today on the websites of the FCA and PSA press services. Once again, it was confirmed that as a result of the merger a new company will be created with the equal participation of two partners (that is, the shares will be divided in a ratio of 50:50).

Photo: PSA head Carlos Tavares and FCA head Mike Manley



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The current president of PSA Carlos Tavares will head the new merged company, and John Elcan will become the chairman of the board (now he holds a similar post in FCA). In addition to Carlos Tavares, the council will include ten more people (five on each side). The head office will be located in Holland.

It is expected that as a result of the merger, an auto giant will be created, which will take fourth place in the world in terms of sales of new cars, as well as third place in terms of revenue. Judging by extremely rough estimates (they are based on the results of 2018), a single company will sell at least 8.7 million cars annually, and revenue will be about 170 billion euros. Operating profit will exceed 11 billion euros, and its profitability – 6.6%.

In the photo: Jeep brand logo


Apparently, the General Motors concern, which last year is in fourth place in terms of sales of cars (with a result of 8.4 million units), will have to give up one line. Recall that it leads the top three Volkswagen (10.8 million units), the second is the alliance of Renault, Nissan and Mitsubishi (also about 10.8 million units), Toyota has a “bronze” (10.6 million units).

The final deal is likely to be closed at the end of 2020 – the beginning of 2021 (12-15 months after the signing of the agreement). According to the calculations of the mergers, the combined company will be able to save on expenses of about 3.7 billion euros per year. At the same time, automakers on both sides continue to insist that they do not plan to close their plants. About 40% of the indicated amount, the companies plan to save by using only platforms, engine families and joint development of new technologies. Another 40% – due to the optimization of purchases, the remaining 20% ​​falls on other areas, such as logistics, marketing, etc.

In the photo: Peugeot brand logo

FCA and PSA expect to strengthen their influence in each other’s markets: for example, FCA is doing pretty well in North and Latin America (we are talking about sales of Jeep and Ram cars). PSA still has strong positions in Europe thanks to Peugeot, Citroen and Opel / Vauxhall. But in China, both Fiat Chrysler Automobiles and PSA Group are selling cars. Only in January-October 2019, Peugeot indicators fell by 54.5%, Citroen – by 54.8%, Jeep – by 46%.

It is estimated that the combined company will receive about 46% of revenues in Europe and approximately 43% in North America. This will make it possible for the new auto giant to change its strategy in other regions (probably, it is just about the Chinese car market).

Earlier this year, the FCA was already trying to merge with another major market player: in the summer of 2019, it became known that the deal with Renault was broken. The reason was that Fiat Chrysler could not get the full support of the French government (which owns 15% of Renault), and the agreement did not take into account the interests of the alliance partner – Nissan.

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