Fiat Chrysler Automobile's headquarters, located in Auburn Hills. (Photo: Eric Seals, Detroit Free Press)
Fiat Chrysler and Peugeot owner PSA are in merger talks, the companies confirmed Wednesday.
The companies issued separate, almost identical statements, signaling a coordinated messaging strategy, with Italian-American carmaker FCA adding that it had no additional comment.
"Following recent reports of a possible business combination between Groupe PSA and FCA Group, Fiat Chrysler Automobiles NV … confirms that discussions are underway to create one of the world's leading mobility groups. FCA has nothing further to add. at this time, "the company said.
Reuters reported that a merger between FCA and the French car company could create a "$ 50 billion giant better positioned to address a number of costly technological and regulatory challenges the global automotive industry faces."
FCA came close to merger last summer with Renault, but complications with the French government d FCA to withdraw.
The FCA had proposed a 50-50 merger with Renault in May, saying it would create the world's third-largest car manufacturer and save $ 5.6 billion annually. Since then, FCA chairman John Elkann, whose family has controlling interest in the company, confirmed the group's bid to pursue an alternative alliance, Reuters said.
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"If a combination of Peugeot and the FCA succeeds in overcoming political, economic and governance barriers, the new business will still face significant challenges," Reuters said , with an expected slowdown in sales going forward and large investments needed to keep pace with electrification and future mobility.
Global automakers are meeting the prospect of reduced demand coinciding with a need to invest in electrification and autonomy.
With that in mind, several analysts noted the benefits of the deal.
"The automotive industry continues to realize that partnership is a must in this rapidly changing environment. A merger between FCA and PSA can benefit both parties. PSA is a major global car manufacturer with a good European footing and technologies FCA can benefit from "FCA has a big footprint in the US, a market PSA is trying to get into. On the surface, it makes sense," said Akshay Anand, executive analyst for Kelley Blue Book.
Brian Moody, managing editor of Autotrader, noted that "each company has something the other wants. Fiat Chrysler can certainly use some of Peugeot's cash and / or existing platforms to help build a fleet of new new cars, including electric On the other hand, Peugeot would like to have access to a large dealer network, as well as a way to leverage the success of brands and vehicles like Ram and Jeep. "
An FCA-Peugeot merger would create the world's fourth-largest car manufacturer , behind Volkswagen, Toyota and the Renault-Nissan alliance.
The FCA, based in the Auburn Hills-based US business, was created by the Chrysler bankruptcy a decade ago when US carmakers crashed in the middle of the Great Recession.
The PSA's board of directors will meet Wednesday to discuss the potential deal, Reuters and the Wall Street Journal reported.
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