Fiat Chrysler Automobiles and French Automaker Groupe PSA have signed the “50/50 merger” agreement in order to reshape the global industry. The main reason for the partnership was to increase cost-saving efficiencies. Moreover, with this merger, the companies aim to form the fourth-largest global automaker by volume and third-largest by revenue. According to reports, the completion of the merger is expected to occur in 12 to 15 months.
According to Mike Manley, CEO of FCA, “with this merger, we’re actually going to execute what is only been theorized many times before which is smart industry consolidation.”
The partnership brought many benefits, PSA will get a long-sought presence in the U.S. and should help FCA to progress in developing low-emission technology, where it has lagged rivals. In addition, FCA will get access to PSA’s more improvised modern vehicle platforms, to help the company to combat with tougher new emissions rules, while PSA will benefit from FCA’s profitable U.S. business that features brands such as Jeep and Ram. With this merger agreement, the companies highlighted the greater efficiencies by “optimizing investments in-vehicle platforms, engine families and new technologies while leveraging increased scale will allow the business to raise its purchasing performance and introduce additional value for stakeholders”. Additionally, the companies estimated combined revenues of nearly 170 billion euros or about $190 billion with annual sales of 8.7 million units and an operating profit margin of 6.6% based on 2018 results.