On Thursday it became official: Fiat Chrysler Automobiles and PSA Group are merging to become the world's fourth-largest automaker. Alfa Romeo, Citron, Chrysler, Dodge, DS, Fiat, Maserati, Opel, Peugeot, Ram, and Vauxhall will all now share a single corporate parent and merge operations. In a press release, Fiat Chrysler and PSA said that the 50:50 merger should save more than $4 billion (3.7 billion) a year from "run-rate synergies without any plant closures."
Merging with another large automaker has been FCA's plan for a while. Before his untimely death, Sergio Marchionne had conducted talks with many potential suitors, and earlier this year FCA was in active discussions with Renault. But those talks ultimately went nowhere, and now FCA will join up with France's other big automaker, PSA Group.
On the face of it, the merger makes a lot of sense. FCA has strong sales in the Americas and a decent portfolio of luxury brands and SUVs and trucks. PSA is strong in Europe, and its brands are better mainstream cars built using more modern architectures. PSA Group is also well ahead of FCA in terms of electrification.
The new company, which has yet to be named, will be registered in the Netherlands, although it will "continue to maintain significant presences in the current operating head-office locations in France, Italy, and the US." PSA Group boss Carlos Tavares will be CEO of the 11-person board, with FCA's John Elkann as chair.
Based on 2018's results, the new company would have 8.7 million sales, combined revenues of $190 billion (170 billion), and $12.3 billion in profit. However, from next year those profits are at risk from massive European Union fines that await any OEM unable to get its fleet-wide emissions below 95g CO2/km. Earlier this year, we learned that FCA had entered into an agreement with Tesla, where it would pay the US automaker "hundreds of millions" of dollars in order to count the American EVs as part of its European fleet.
But the new merged automaker will have a much larger pool of vehicles to take into account, as well as access to in-house BEVs that could be badge-engineered and sold at a profit. Perhaps the biggest loser in this merger could be Tesla, where a profitable quarter still depends on emissions credits, not selling cars.
As for US car buyers, it's probably a little too soon to know what this will mean in terms of the cars we might be able to buy. PSA Group has wanted to return to the US market for a while, and in February news broke that Peugeot would lead that charge. But currently the company's sole US presence is a car-sharing service called Free2Move that operates in Washington, DC. I'd like to think modern American car buyers will take to quirky French crossovers with more enthusiasm than that which greeted a resurgent Alfa Romeo.