Fiat Chrysler and PSA merger faces final hurdle

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A merger between Fiat Chrysler and France’s PSA Group faces its final hurdle as the two companies seek shareholder approval on Monday.

The deal, if approved, will create the world’s fourth-biggest carmaker and comes two years after talks began.

The combined company will bring together well-known brands such as Peugeot, Citroen and Vauxhall from PSA with Fiat, Jeep, Chrysler and Ferrari.

The new company following the $52bn (£38bn) deal will be called Stellantis.

Stellantis, which means to brighten with stars, will have 14 car brands under one roof including niche players Maserati and Alfa Romeo.

Executives expect the merger to be finalised by the end of March.

They say it will provide significant cost savings.

This has raised concerns about the closure of some factories across the brands, including those of Vauxhall which employs 3,000 people in the UK.

However, in November PSA pledged not to close factories after the merger even though the combined group would have spare production capacity of almost six million cars.

Is bigger better?

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While creating the fourth biggest carmaker globally, critics argue that bigger isn’t always better.

Tesla is often used as an example of this as it has relatively small production compared to its bigger rivals but a much higher market value.

And US-based General Motors (GM), the world’s fifth biggest car brand in terms of production, has scaled back from many markets to focus on North America.

While it will be ahead of GM and Ford in terms of global sales, Stellantis will still trail VW, the Renault-Nissan-Mitsubishi alliance and Toyota.

Asian focus

Bosses hope the combined firm will have more financial muscle to compete with its bigger rivals.

One area Stellantis is expected to focus on is China, the world’s biggest car market where 21 million vehicles are sold each year.

“On their own, each group might not be able to afford a reboot in China,” said Philippe Houchois, an analyst at Jefferies investment bank.

But managing such a large portfolio of brands will be a major challenge experts say as they could eat into each other’s sales.

Source: BBC

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