► PSA and FCA to join forces
► What does Stellantis mean?
► 15 car brands under one roof
It’s official: Groupe PSA and Fiat Chrysler Automobiles have joined forces.
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.
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 2019 after FCA’s brief engagement to Renault imploded in May 2019.
The new company has listed itself on stock exchanges, with trading beginning on Monday 18 January on the New York Stock Exchange, Euronext in Paris and Mercato Telematico Azionario in Milan as ‘STLA’.
How big does the merger make Stellantis?
Stellantis is now the fourth-biggest car maker in the world by volume, behind Volkswagen AG, Toyota and the Renault-Nissan-Mitsubishi Alliance. It will have revenues of €170bn and profits of around €11bn, and it will build cars wearing the badges of 15 different marques. 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.
What does Stellantis 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 name plates. Ironically, the two which give FCA its name (Fiat and Chrysler) are among the most vulnerable, along with Lancia, but actually killing Fiat may prove politically impossible. Fiat is only just starting to electrify its range on a newly-developed platform, but at least the huge spending required can now be amortised over nearly nine million sales. Both groups lag badly in China, and the merger won’t help much there.
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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