Fiat Chrysler and Peugeot Citroën Merger Looks Set to Proceed
The European Commission looks set to approve the merger of Fiat Chrysler Automobiles (FCA) and Peugeot Société Anonyme (PSA) according to this report from Reuters. The US$38bn merger would create the worlds fourth largest auto manufacturing group, with a suite of brands including Fiat, Ferrari, Maserati, Jeep, Dodge, Chrysler, Peugeot, Opel, Citroen DS and more.
One major sticking point for European regulators has been the estimated 35% market share of the European light van market by Stellantis. The company responded “To allay EU antitrust concerns, PSA has offered to strengthen Japanese rival Toyota Motor Corp., with which it has a van joint venture, by ramping up production and selling it vans at close to cost price, people said. FCA and PSA will also allow their dealers in certain cities to repair rival brands.”
It’s expected that the merger will take 2-3 months to finalise, but should happen well before the offical February 2 2021 deadline.
Source: Reuters
Our opinion: COVID-19 has impacted carmakers significantly, with most revising down their unit sales figures for 2020 and their earnings estimates. FCA and PSA have a good foundation of EV research and development, as well as some good products on the market, but with consumers and government regulations alike demanding cleaner vehicles, billions of dollars will need to be spent by automakers over the coming 3-5 years to produce affordable electric vehicles.
The Volkswagen Group leads the way for legacy automakers in terms of EV R&D (partly due to penalties imposed as a result of the Dieselgate fiasco), and the ID.3 has received generally positive reviews since launch in Q2 2020. For other manufacturers to catch up to Volkswagen (let alone Tesla), It’s going to take a lot of money, and a merger of these two companies into Stellantis Group will allow for larger sharing of platform architecture and drivetrains, as well as manufacturing facilities. It may accelerate the electrification of all brands, and minimise the expensive purchase of regulatory credits to offset emissions from companies such as Tesla.
Peugeot e208GT. Image: Peugeot
Fiat 500e. Image: REUTERS/Flavio Lo Scalzo