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Peugeot Group and Fiat Chrysler tie the knot to become world’s 4th largest automaker

Peugeot Group and Fiat Chrysler tie the knot to become world’s 4th largest automaker

Fiat Chrysler in the United States and the Peugeot Group in France announced on Wednesday they have signed a binding agreement to merge the two automakers into one entity that is anticipated to be the world 3rd largest by revenue and 4th largest original equipment manufacturer (OEM).

In a statement, Peugeot Citroen South Africa said the merged entity will have sales of around 8.7 million vehicles per year, generating revenues of almost €170 billion and operating profits of over €11 billion. Fiat Chrysler is a dominant player in the North and South American markets while Groupe PSA commands a significant market share in Europe.

“The gains in efficiency derived from larger volumes, as well as the benefits of uniting the two companies’ strengths and core competencies, will ensure the combined business can offer all its customers best-in-class products, technologies and services and respond with increased agility to the shift taking place in this highly demanding sector,” stated Groupe PSA.

“The efficiencies that will be gained from optimizing investments in vehicle platforms, engine families and new technologies while leveraging increased scale will enable the business to enhance its purchasing performance and create additional value for stakeholders. More than two-thirds of run rate volumes will be concentrated on 2 platforms, with approximately 3 million cars per year on each of the small platform and the compact/mid-size platform.”

The two automakers plan to save rough €3.7 million per year in synergies arising from the merged operations. Some 40% of these gains is expected to originate from technological convergence in production.

“Those synergies will enable the combined business to invest significantly in the technologies and services that will shape mobility in the future while meeting the challenging global CO2 regulatory requirements. With an already strong global R&D footprint, the combined entity will have a robust platform to foster innovation and further drive development of transformational capabilities in new energy vehicles, sustainable mobility, autonomous driving and connectivity.”

The merger is expected to be completed in twelve to fifteen months due to regulatory compliance and shareholder approval.

Carlos Tavares, Chairman of the Managing Board of Groupe PSA and the Chief Executive designate, said: “Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services. I have every confidence that with their immense talent and their collaborative mindset, our teams will succeed in delivering maximized performance with vigour and enthusiasm.”

The merged group will be domiciled in Holland with listing in France, Italy and New York.


 

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