Fiat Chrysler and Peugeot Merge to Create Fourth Largest Car Maker

Two months after Fiat Chrysler Automobiles (FCA) and Peugeot S.A. (PSA) announced that they were seeking to merge, yesterday, 18^th December 2019, they signed a binding agreement for a 50-50 merger of their businesses.

According to Statista, the Fiat Chrysler-Peugeot Merger will create the world’s third largest car manufacturer by revenue and the fourth largest by automobile sales, trailing only Volkswagen, Toyota and the strategic alliance between Renault, Nissan and Mitsubishi Motors.

Fiat Chrysler, the group behind popular brands such as Jeep, Dodge, Ram and Alfa Romeo, was the eighth largest automobile group in the world last year, selling 4.65 million vehicles in total.

Adding Peugeot’s sales of 3.88 million cars, the newly formed company would leapfrog Honda, For, Hyundai and General Motors to become number four in the increasingly consolidated car industry.

“With its combined financial strength and skills, the merged entity will be particularly well placed to provide innovative, clean and sustainable mobility solutions,” the announcement of the deal reads, adding that the merger would create €3.7 billion in annual run-rate synergies, mainly thanks to technology, product and platform-related savings as well as scale effects in purchasing.

Together, the new merged entity will employ 400,000 people.

Analysts say that the merger could allow Peugeot into break in the American market where it is not well established and could benefit from Fiat Chrysler’s position.

The two companies say that the merger will help them address future challenges such as the move to electric vehicles.

Additionally, the merged companies will achieve cost savings of 3.7 billion euros (US $4.1 billion) a year without closing factories.

The deal is still subject to shareholder and regulatory approval and could be completed in 12 to 15 months.

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