In October we learned the first details of what could result from the merger of FCA and PSA, but the truth is that, at the time, the agreement between the two groups had not yet been closed. Now, after two months of in-depth negotiations, both car groups have confirmed the merger.
What will the new car giant be called? We don't know, it hasn't been decided yet. What we do know is that despite the merger agreement being signed, it will take another 12 to 15 months for the process to be complete.
Leading the new group will have Portuguese Carlos Tavares as CEO, at least for the first five years, with the remaining administration comprising 10 more members, with five appointed by the FCA (Fiat Chrysler Automobiles) and another five by the PSA (Peugeot SA). The administration will include two members as representatives of the workers of each group.
Carlos Tavares, Chairman of the Management of PSAOur merger is a huge opportunity to take a stronger position in the automotive industry as we seek to transition to a world of cleaner, safer and more sustainable mobility and to provide our customers with world-class products as well. as technology and services.
3.7 billion euros in synergies
The merger will result in the world's 4th largest automotive group, with 8.7 million vehicles sold (combined sales in 2018), trailing only Toyota, Volkswagen Group and the Renault-Nissan-Mitsubishi Alliance.
Considering the context of enormous change that the automotive industry is going through (electrification, autonomous driving and connectivity), which requires massive investments, it is natural that synergies are one of the main benefits of this new merger.
According to the joint statement, expectations are to achieve a saving of practically 3.7 billion euros.
About 40% of this value is due to the expected optimization in terms of platforms, engine families and new technologies. It is expected that more than two-thirds of the expected production volumes will be concentrated on just two platforms, the equivalent of three million cars, mainly small and medium-sized.
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Another 40% portion of this amount will correspond to savings made on purchases (suppliers) thanks to the superior scale of the new group. The remaining 20% of the total of 3.7 billion euros will result in savings in marketing, IT (information technologies), G&A (General and Administrative Expenses) and logistics.
In this path of synergies and optimization that will occur with the merger of FCA and PSA, the official statement states that there will be no factory closures — today there are more than 400 thousand employees distributed between the two groups.
Global presence
With the merger of FCA and PSA, the new group gains a stronger presence in key markets. PSA has a strong presence in Europe, while FCA has strong positions in both North and Latin America. According to the 2018 figures, 46% of the turnover of this new group would come from the European continent, while 43% would come from North America.
Despite the broad global presence, gaps still persist, especially in China, where the FCA still has a minimal presence, and the PSA has seen its presence substantially reduced in recent years.
Mike Manley, Executive Director (CEO) of FCAThis is a union of two companies with incredible brands and a dedicated and skilled workforce. Both had to face tough times and emerged as agile, smart and formidable competitors. Our people share a common thread — they see challenges as opportunities to be embraced and as a way to be better than we are.