Automakers Fiat Chrysler and PSA will merge

Italian and American automakers Fiat Chrysler (FCA) and France’s PSA (Peugeot, Citroën and Opel) will merge. The two have tonight reach an agreement. The agreement will be further detailed in the coming weeks.

The combined company has a combined turnover of 170 billion euros and an operating profit of 11 billion euros. Together they produce 8.7 million vehicles annually; Only Volkswagen, Toyota and Renault-Nissan are bigger.

According to the two car companies, which employ more than 400,000 people, “the world leader will have to emerge in the era of sustainable mobility”. There have been rumors for several days that the two had reconciled. Fiat Chrysler was looking for a partner for a while. Previous negotiations with Renault were unsuccessful.

The two automakers want to save costs and join forces in the development of electric vehicles, where both are lagging behind other manufacturers. With Fiat Chrysler, PSA is finding success in America, where FCA is big with brands like Jeep, Dodge and Chrysler.

In Europe, China and Latin America there is overlap and significant cost savings can be achieved. The company believes that the synergy and efficiency will generate around 4 billion euros annually.

The current CEO of PSA, Carlos Tavares, will be the new CEO of the merged company, and the current boss of Fiat Chrysler, John Elkann, will be the chairman of the management board. The main office will be in the Netherlands, where Fiat Chrysler already has its legal headquarters.

Shareholders and regulators still have to approve the merger. The French state is the main shareholder with 12 percent of PSA’s shares. Chinese carmaker Dongfeng is also a major shareholder of PSA. That could still be a stumbling block for Americans.

Fiat Chrysler employs 198,000 people, of which 64,000 are in Europe, while PSA employs 211,000. FCA is best known in Europe for the Fiat, Alfa Romeo and Maserati sports car brands.

The French company took over the Opel brand from General Motors more than two years ago; this has now led to the first prototypes developed together.