► PSA and FCA to join forces
► What does it mean for the industry?
► 15 car brands under one roof
Critics might like to portray the car industry as arthritic and slow-moving, but the merger between the PSA and FCA groups show that it can occasionally be the very opposite. The two have been gently courting for a while, but serious dating only restarted in September after FCA's brief engagement to Renault imploded in May 2019.
PSA's CEO Carlos Tavares and FCA's chairman John Elkann shook hands on the deal over dinner in Paris on Sunday and we've already seen its broad outline. And now it's been finalised.
How big does the FCA merger make PSA?
The new and as-yet unnamed entity will be the world's third biggest carmaker, ahead of General Motors. It will have revenues of €170bn, profits of around €11bn and build cars under 15 marques.
According to an announcement from the new company, it will be the 4th largest global OEM by volume and 3rd largest by revenue. Annual sales will stretch to 8.7 million units, with combined revenues of nearly €170 billion.
It will be bigger than Volkswagen in Europe and have an SUV and truck business in the US which is setting record margins and profits. By combining, it will generate an additional €3.7bn in annual profit for a one-off cost of around €2.8bn, but does not expect to close any factories.
How will the management structure work?
John Elkann will be group chairman and Carlos Tavares will take the place of group CEO. Under the brilliant leadership of Tavares and after his 2017 acquisition of Vauxhall and Opel, PSA is bumping its head on the ceiling in Europe and needs a presence in the US. FCA needs scale and stability and to refresh Fiat's line-up.
Tavares is just the man for that job. He'll lead the merged business as CEO for the next five years, with FCA's British-born boss Michael Manley as his number two, running the US operations, and the 43 year-old Elkann as chairman.
What does the PSA/FCA merger mean for new cars?
Tavares took Vauxhall-Opel from death's door to profit in a year and it's hugely exciting to think what he might do to with Fiat, Alfa and Maserati. He'll be able to generate huge savings - and make better cars - by simply picking the new group's best platform in each segment and building everything on that.
The merger doesn't solve everything for Tavares, though, and it might create some new headaches. He'll want to rationalise those 15 nameplates. Ironically, the two which give FCA its name - Fiat and Chrysler - are among the vulnerable, but actually killing Fiat may prove politically impossible. Both carmakers lag on EV and AV tech, but at least the huge spending required can now be amortized over nearly nine million sales. Both groups lag badly in China, and the merger won't help much there.
Mike Manley, as of 1 November, has also reportedly discussed the shelving of the 8C (above) and GTV projects on a conference call with the media.
But overall this huge deal makes huge sense, and more sense than a merger between Renault and FCA. In our CAR Power List 2019, we ranked Tavares at #3, partly for the likelihood that he'd pull off this deal. We also said that he was the new Sergio Marchionne: a far-sighted and unsentimental leader who saw that the industry needed to consolidate in order to thrive. We think Sergio would approve.
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