Fiat | Chrysler | Peugeot | Citroen | Vauxhall

Fiat Chrysler and Peugeot-Citroen-Opel-Vauxhall plan to merge

The Italian-American and French automakers have confirmed they are working towards a 50/50 merger and result in the world’s fourth largest carmaker.

Annual sales of the combined Fiat Chrysler (FCA) and PSA Group would be around 8.7 million cars per year, placing it behind Renault-Nissan-Mitsubishi, the Volkswagen Group and Toyota.

The two companies believe they can extract €3.7 billion (US$4.1 billion) in annual savings from the merger without having to resort to plant closures.

If the merger goes ahead, the two automakers will be owned by a new company headquartered in the Netherlands, but retaining regional centres in Italy, France and the USA. The combined firm’s CEO will be Carlos Tavares (current PSA boss), and its chairman will be John Elkann (current FCA chairman).

The largest shareholder will be Agnelli family, with the French government, the Peugeot family, and Chinese automaker Dongfeng all retaining large stakes and locked in place for seven years. PSA and FCA will each be given five board seats, with one tie-breaker seat for an independent director.

FCA currently runs the following brands: Fiat, Alfa Romeo, Lancia, Maserati, Chrysler, Dodge, Jeep, and Ram. Both Chrysler and Lancia are down a single model each, while Alfa Romeo and Lancia are struggling to stay competitive in the luxury segment.

Most of the group’s profit comes from its Ram pickup trucks and Jeep SUVs, while a majority its sales come from Italy, Latin America and North America.

The PSA Group, on the other hand, is the second largest automaker in Europe, but no presence in North America. CEO Carlos Tavares has been lauded for his purchase and quick turnaround of the Opel and Vauxhall brands. While the main Peugeot and Citroen marques are going well, the DS luxury brand is still in its infancy.