Fiat Chrysler and Peugeot owner PSA Group have announced the terms of a $48-billion merger that would create the world’s fourth-largest automaker and help spread the huge cost of developing electric and autonomous vehicles.
With automakers needing to cut costs as the global car market slows and at the same time invest heavily in developing cleaner vehicles, the French and US-Italian firms said their tie-up would generate 3.7 billion euros in annual savings.
The boards of PSA and Fiat Chrysler (FCA) backed the plan on Wednesday that would result in a company with combined sales of nearly 170 billion euros ($190 billion) per year and 11 billion euros of operating profits, with negotiations continuing to resolve all the details. The tie-up would leapfrog the carmakers into fourth largest in terms of sales, behind Volkswagen, Renault-Nissan-Mitsubishi and Toyota, and would combine a host of well-known brands from Alfa Romeo, Jeep and Dodge to Citroen, Opel and Vauxhall.
The boards of both carmakers “both share the conviction that there is compelling logic for a bold and decisive move that would
create an industry leader with the scale, capabilities and resources to capture successfully the opportunities and manage effectively the challenges of the new era in mobility,” said the statement.