Remember back when Fiat Chrysler expressed interest in, proposed formally, and then abruptly cancelled a merger with Renault? Well in the years since then... What’s that? That was only 5 months ago? Jeez, 2019 has been a weird year.
Well, in the 5 months since that happened, Fiat Chrysler has stayed in France courting another dance partner and has surfaced with Peugeot/Citroën parent company PSA arm in arm. That’s right, the two trans-Atlantic automakers are looking to jump the broom in a deal that could create a giant monster of car making worth nearly $50 billion, according to a report by The Wall Street Journal.
The current discussion involves an all-share merger of equals, which is a term Chrysler should be well familiar with. This would allegedly place Carlos Tavares, CEO of Peugeot at the head of the hopeful merger, while John Elkann, current FCA Chairman, would continue on as chair of the newly minted company. This is all according to WSJ’s unnamed source inside the merger discussion.
FCA has stated from the beginning that the goal here is to reduce operating costs with added scale and shared resources. While PSA group isn’t quite as large as the merger FCA was eyeballing just months ago, it would still be a huge collection of brands. Based on 2018 sales, the joint Fiat Chrysler-Peugeot would jump to fourth in sales globally behind Toyota, Renault/Nissan/Mitsubish, and Volkswagen AG, placing them on basically equal footing with General Motors worldwide.
FCA desperately needs an injection of small fuel efficient cars, an influx of electric and hybrid technology, and a bigger foothold in European sales. PSA could gain new and exciting models from the Jeep and Ram brands to sell, and could potentially lead to a renewed attempt to bring the brands back to the U.S. market.
Consolidation is on the lips of pretty much everyone in the auto industry right now. There is an intense pressure to spend money on innovation right now with electrification and autonomy being hot topics. This would allow FCA and PSA to consolidate efforts in that front, reducing expense for either. It could also mean closing strategic manufacturing plants, laying off workers, and reducing future investment.
FCA currently owns the brands Chrysler, Dodge, Jeep, Ram, Alfa Romeo, Fiat, Lancia, and Maserati. Groupe PSA consists of Citroën, Peugeot, DS, Opel, Vauxhall, and the Ambassador brand for the Indian market.