FCA has announced they will merge with PSA Peugeot from France to create the world’s fourth-largest automaker and build a strong future.
The FCA group of brands has changed and evolved several times over the past couple of decades and now is positioned to continue to be a leader in the market. This merger will allow the company to handle the race to develop electric cars, grow market share for the brands that currently aren’t in the European or American market, and continue to grow with shared technologies that can benefit all brands under the newly merged group.
The Challenges for this New Group
FCA has a strong foothold in North America, where it makes at least two-thirds of its profits every year. Currently, Peugeot is the number two automaker in Europe, but both have a hard time gaining traction in China. Even though China is the largest automotive market in the world, these two companies haven’t found a way to capture enough of this market. This seems a bit odd considering Peugeot has a Chinese shareholder, Dongfeng, which should be able to make it easier for this brand to gain the traction needed.
A Merger of Savings
Not only will this merger allow FCA and Peugeot to begin to share technology and help the other gain strength where they are strong, but there should also be serious savings for each company. The 50/50 merger will create a savings of $4 billion which can be achieved without closing any factories, which was a concern when word of this merger began in Europe. The concern of this took place mostly in France and Italy where the two brands have the most overlap in the market.
What Does Each Company Bring to the Merger?
FCA has strong brands with Jeep and Ram being two of the strongest in the North American market. This side of the merger is focused on relaunching premium brands and offer a serious priority on hybrid engines. This could mean that we see more Alfa Romeo and Maserati models in the future. PSA Peugeot makes mostly small city cars, family sedans, and SUVs using the names of Peugeot, Citroen, and Opel. The SUVs are where the two companies will overlap the most, but each one brings the expertise needed to assist the other and grow toward automotive success in the future.
Merging the Board and Offering the Future
The boards of both companies will merge together to create one 11-member board with five coming from each company and the CEO, Carlos Tavares, will come from Peugeot. The combining of these companies will allow the sharing of the cost of the development of future technology. This includes electric cars, autonomous driving, and future vehicle platforms. This could mean that we will begin to see Peugeot models in North America to give us a larger lineup of vehicles to choose from for the drive we want to make every day. This merger makes perfect sense and should put the newly formed company in a strong competitive position for the future.
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