On Thursday it became official: Fiat Chrysler Automobiles and PSA Group merge to become the world's fourth largest car manufacturer. Alfa Romeo, Citroën, Chrysler, Dodge, DS, Fiat, Maserati, Opel, Peugeot, Ram and Vauxhall will now share a single business parent and merge the business. In a press release, Fiat Chrysler and the PSA said the 50:50 merger should save more than $ 4 billion ($ 3.7 billion) a year from "ongoing synergies without any closure of the plant."
Merging with another major automaker has been FCA's plan for a while. Prior to his untimely death, Sergio Marchionne had held talks with many potential suitors, and earlier this year the FCA was in active discussions with Renault. But those conversations eventually went nowhere, and now the FCA will join forces with France's other major car manufacturer, PSA Group.
Against that background, the merger makes a lot of sense. FCA has strong sales in America and a decent portfolio of luxury brands and SUVs and trucks. PSA is strong in Europe, and the brands are better mainstream cars built with more modern architectures. The PSA Group is also well ahead of the FCA in terms of electrification.
The new company, which is not yet named, will be registered in the Netherlands, although it will "continue to maintain significant presence in the current operational headquarters locations in France, Italy and the United States." PSA CEO Carlos Tavares will be CEO of 1[ads1]1-person board, with FCA's John Elkann as chairman.
Based on 2018 results, the new company would have $ 8.7 million in sales, total revenues of $ 190 billion ($ 170 billion), and $ 12.3 billion in profits. However, as of next year, the profits from risk massive EU fines that await any OEM that fails to get its fleet-wide emissions below 95g CO 2 / km. Earlier this year, we were told that the FCA had signed an agreement with Tesla, where it would pay the US carmaker "hundreds of millions" of dollars to count the US EVs as part of its European fleet.
But the new merged car manufacturer will have a much wider range of vehicles to take into account, as well as access to internal BEVs that can be designed and sold at a profit. Perhaps the biggest loser in this merger could be Tesla, where a profitable quarter still depends on emissions credits, not selling cars.
When it comes to American car buyers, it is probably a little premature to know what this will mean in relation to cars we might be able to buy. The PSA Group has wanted to return to the US market for a while, and in February news broke that Peugeot would lead the charge. But today, the company's only US presence is a car sharing service called Free2Move that operates in Washington, DC. I would like to say that modern American car buyers will take on strange French crossovers with more enthusiasm than greeted by a reviving Alfa Romeo.