Fiat Chrysler, Peugeot to Merge

Posted: 19 December 2019 10:40 am
Car Workers Inspecting Production Line

Car manufacturing line

The French and American-Dutch carmakers are poised to become the fourth-largest carmaker in the world.

Fiat Chrysler and Peugeot have announced that the two automakers will merge, making the fourth-largest car company by volume in the world. The merger would position the combined maker of Jeep, Maserati, Citroen, and Dodge to make and market sustainable cars more efficiently.

“With its combined financial strength and skills, the merged entity will be particularly well placed to provide innovative, clean and sustainable mobility solutions, both in a rapidly urbanizing environment and in rural areas around the world,” the companies wrote in a press release. “The gains in efficiency derived from larger volumes, as well as the benefits of uniting the two companies’ strengths and core competencies, will ensure the combined business can offer all its customers best-in-class products, technologies and services and respond with increased agility to the shift taking place in this highly demanding sector.”

The combined company would be the largest American automaker by revenue and one of the largest automakers in the world, behind Volkswagen, Renault-Nissan-Mitsubishi, and Toyota. While domiciled in the Netherlands, FCA US — which produces the vehicle brands that were previously associated with Chrysler Group — is headquartered in the Metro Detroit area. The merged company will leapfrog past General Motors and Ford on the global automotive revenue rankings.

The merger, which will be an equal partnership, was an all-stock transaction, where each companies’ shareholders received shares of the new company. The company has indicated that no plants will be closed due to the merger.

“Those synergies will enable the combined business to invest significantly in the technologies and services that will shape mobility in the future while meeting the challenging global CO2 regulatory requirements,” the press release continues. “With an already strong global R&D footprint, the combined entity will have a robust platform to foster innovation and further drive development of transformational capabilities in new energy vehicles, sustainable mobility, autonomous driving and connectivity.”

The new company, which has yet to be named, will be based in the Netherlands.

The Push for Clean Vehicles

The merger would give Fiat Chrysler access to Peugeot’s suite of “multi-energy platforms” technology, which includes hybrids and electric vehicles. While neither company have a dominating position in the clean vehicle market, there is the hope that the new company’s combined research and development team and manufacturing base would make clean energy development cheaper.

“That obviously increases choice and improves overall fleet performance from a CO2 perspective,” Fiat Chrysler CEO Mike Manley said to the Associated Press. “In any competitive environment, you win because you offer your customers great value.”

This is not the first time Fiat Chrysler attempted to improve its economy of scale through merging. Last spring, a deal with Renault-Nissan-Mitsubishi failed over the French government’s hesitations surrounding Nissan. The French government owns 12% of Peugeot. Fiat Chrysler may have been drawn into seeking a partner to compete with Ford, which has entered a partnership with the world’s largest automaker Volkswagen, or Mazda, which has paired up with Toyota.

The merger is expected to take 12 to 15 months as antitrust regulators in the US and the European Union review the deal.

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