Automaker PSA and Fiat Chrysler complete mega-union

Automaker PSA and Fiat Chrysler complete mega-union

Fiats and Peugeots

The two companies are merging.

(Photo: AFP)

Paris, Rome French Peugeot maker PSA and Fiat Chrysler (FCA) have completed their massive merger to become the world’s fourth largest car company. The two companies confirmed this in a joint statement on Saturday.

The new Stellantis manufacturer carries 14 car brands such as Opel, peugeot, Citroën, Jeep, Maserati or Alfa Romeo. About 400,000 people are employed.

PSA and FCA expect annual savings of five billion euros as a result of the collaboration. They do not want to close any of the 120 plants. On the other hand, there are one-time costs during the merger of around four billion euros.

Above all, the merger is intended to eliminate the so-called risks of geographic clustering of the two groups. PSA currently faces no presence in China or the United States.

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The French sell more than three quarters of their cars in Europe. FCA, for its part, relies heavily on the US market, earning two-thirds of its sales there. Together, these two groups are well positioned in Europe and North America.

PSA boss Tavares will probably try primarily to maximize synergy effects by drastically reducing the number of vehicle platforms. Of the current 13 different designs of which small cars, limousines, SUVs and jeeps are built by PSA and FCA, the top two to four may remain in the medium term.

Overcapacity in Europe

About 40 percent of the synergy effect came from platforms and engines, said Fiat CEO Mike Manley at the annual digital conference. 35 percent will be possible through savings, seven percent through improvement in the sales network.

At the same time, experts expect a reduction in workers, because more than three dozen factories in Europe have been idle for a long time for years. The corona crisis has tended to aggravate the situation. Ferdinand Dudenhöffer, head of the Center for Automotive Research (CAR), estimates that the Stellantis will have an excess production capacity of “25 to 30 percent” on average in Europe.

In particular, the traditional German brand Opel could be the biggest loser of the merger. The jobs of a third of the 36,000 engineers bringing PSA and FCA online may become obsolete. And in Rüsselsheim, ITEZ is the main development center of the new group. For example, Opel may lose light commercial vehicle development capabilities to Fiat, as the Italians have more expertise here.

Stellantis shares are scheduled to start trading in Milan and Paris from Monday.

More: Read more about PSA’s merger with Fiat Chrysler here.