Remember when Fiat Chrysler expressed interest in formally proposed and then abruptly canceled a merger with Renault? Well in the years since then … What is it? It was only 5 months ago? Jeez, 2019 has been a nice year.
Well, in the five months since that happened, Fiat Chrysler has stayed in France after another dance partner and appeared with Peugeot / Citroën parent company PSA arm in arms. That's right, the two trans-Atlantic carmakers are looking to jump the brunt of a deal that could create a giant monster car worth nearly $ 50 billion, according to a report by The Wall Street Journal . [1
The FCA has stated from the outset that the goal here is to reduce operating costs with increased scale and shared resources. While the PSA group is not as large as the merger FCA came into view just a few months ago, there will still be a huge collection of brands. Based on sales in 2018, Fiat Chrysler-Peugeot would jump to fourth in sales globally behind Toyota, Renault / Nissan / Mitsubish and Volkswagen AG, placing them on a par with General Motors worldwide .
The FCA desperately needs an injection of small fuel-efficient cars, an influx of electric and hybrid technology and a greater foothold in European sales. PSA could sell new and exciting models from the Jeep and Ram brands and could potentially lead to a renewed attempt to bring the brands back to the US market.
Consolidation is on the lips of just about everyone in the car industry right now. There is intense pressure to spend money on innovation right now with electrification and autonomy as hot topics. This will allow the FCA and PSA to consolidate efforts on that front and reduce costs for both. It can also mean closing strategic production facilities, laying off workers and reducing future investments.
FCA currently owns the Chrysler, Dodge, Jeep, Ram, Alfa Romeo, Fiat, Lancia and Maserati brands. Groupe PSA consists of Citroën Peugeot, DS, Opel, Vauxhall and the ambassador brand for the Indian market .