Fiat Chrysler (8th largest automaker) and Peugeot are a step closer in combining both auto powerhouse and build the fourth-largest automotive company, and third in revenue in the world. Both companies reached a binding agreement over a roughly $50bn merger that they claim “will reshape the global car industry.”
“The proposed combination will be an industry leader with the management, capabilities, resources, and scale to successfully capitalize on the opportunities presented by the new era in sustainable mobility,” says PSA Groupe press release.
The 50/50 merger encompasses on evolving the global automotive industry and “putting pressure on competitors to consolidate the efforts of meeting the expensive demand of electrification and self-driving development.”
“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,” says Carlos Tavares, the CEO and chairman of the managing board of Peugeot-maker PSA.
Tavares will also hold the position of CEO in the new company. Meanwhile, FCA CEO Mike Manley’s post is yet to be identified.
The Fiat Chrysler-Peugeot merger will take 12 to 15 months to complete. The new company (the name is yet to be identified) is pegged to see annual vehicle sales of 8.7 million, with revenues that could go roughly $189.54bn.
In the joint statement, both companies highlight the deal as a possible cost-saving venture and a way to cope with slowing auto demand. The merger forecasts a projected annual savings of $4.1bn, with cost-cutting extending to a one-time cost of $3.1bn — which includes vehicle platforms, purchasing scale, and other areas such as marketing, logistics, and IT.