Fiat Chrysler, Peugeot to close much-awaited merger in the industry

By Rahul Vaimal, Associate Editor
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The Italian/American multinational company, Fiat Chrysler and French automobile manufacturer Peugeot (PSA) will ink the much-anticipated merger deal to create Stellantis which will become the fourth-largest auto group in the world.

The Italian/American and French automakers took nearly one year to finalize the $52 billion deal, during which the global economy was upended by the COVID-19. The companies first announced their merger plans to create a group with annual sales of around 8.1 million vehicles in late 2019.

Following the completion of the deal, Stellantis will have enough funds to back the shift to electric driving and take on bigger rivals Toyota and Volkswagen. Shares in the new company will be headed by the current Chief Executive Officer of PSA, Carlos Tavares and the automaker will start trading in Milan, Paris and New York in the following days.

Experts and investors around the globe are looking forward to how Mr. Tavares will address the huge challenges the group is about to face from excess production capacity. As per reports, Mr. Tavares will hold his first press conference as Stellantis CEO in the coming week, after ringing New York Stock Exchange’s bell with Chairman John Elkann.

FCA and PSA have jointly stated that the new company can reduce annual costs by more than $6.1 billion without plant closures and investors will be keen for more details on how it will do this.

Marco Santino, a partner at management consulting firm Oliver Wyman, said he expected Tavares to disclose the outlines of his action plan soon, but without revealing too many details at first. “He has proven to be the kind of person who prefers action to words, so I don’t think he will make loud statements or try to over-sell targets,” he added.

Like all global automakers, Stellantis needs to invest billions in the years ahead to transform its vehicle range for the electric era. Other tasks the company has to face include improving the groups’ performance in the world’s largest car market, rationalizing its huge global empire and addressing massive overcapacity.

The Cheif Executive Officer of FCA, Mike Manley who will head Stellantis’ North American operations stated that 40 percent of the carmaker’s expected operations would come from the convergence of platforms and powertrains and from optimizing R&D investments, 35 percent from savings on purchases, and another 7 percent from savings on sales operations and general expenses.