Car giants PSA and Fiat Chrysler discuss merger

Car giants PSA and Fiat Chrysler discuss merger

PSA Group, the French owner of Peugeot, Citroen and Vauxhall, is discussing a merger with US-Italian rival Fiat Chrysler.

PSA said the discussions were “aimed at creating one of the world’s leading automotive groups”.

Fiat Chrysler recently ditched an attempted merger with the other French car giant, Renault, earlier this year, blaming French politics. 

This year has also seen rumours of a merger between PSA and Jaguar Land Rover but JLR parent Tata Motors said in May that the carmaker was not for sale.

The latest potential merger could create a firm worth more than US$50 billion.

The global slowdown is reducing global demand while firms are looking to invest heavily in electrification, reducing emissions and self-driving technology.

The suggested merger would unite Fiat, Chrysler, Alfa Romeo, Dodge, Jeep and Maserati with PSA’s Peugeot, Citroen, Vauxhall and Opel.

It could also bring renewed uncertainty for Vauxhall staff, two years after PSA bought the UK business along with its Germany cousin, Opel, from US General Motors.

PSA employs about 5,000 people in the UK, including 1,300 in Luton’s factory and 1,300 at Ellesmere Port.

PSA this year said it planned to make the latest version of the Astra model at Ellesmere Port but the investment depended on how the Brexit crisis was resolved.

It has already made hundreds of redundancies at the Merseyside factory since the takeover from GM.

Brexit is hammering the UK’s automotive manufacturers. Honda has pulled out of Swindon and Ford is closing its Bridgend engine factory. JLR said it was cutting thousands of jobs from its global workforce.

BMW and Daimler announced a joint venture in spring 2018 to combine their mobility offerings to bring a single source for ride-hailing to electric-vehicle charging.

Morningstar analyst Richard Hilgert said the total sales of Fiat Chrysler and Peugeot, including joint ventures in China partners, were 8.7 million vehicles in 2018.

It would put the combined group fourth behind Volkswagen, Toyota and the Renault-Nissan Alliance, each with more than 10 million vehicles.

“We view the combination of these two companies as reasonable given global competition, high capital intensity and industry disruption from electrified powertrain as well as autonomous technologies,” Hilgert said.

 

 

 

The demand for electrification is punishing automakers’ finances. Picture credit: Eurasia Times  

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