Following the news that Peugeot S.A (PSA) shareholders approved merger with Fiat Chrysler (FCA);

Animesh Kumar, Director of Automotive and Travel & Tourism Consulting at GlobalData, a leading research and consulting company, offers his view:

“The merged entity, to be called Stellantis, will be the third largest automotive manufacturer in terms of revenues and the fourth largest in terms of volumes after Volkswagen, Renault-Nissan-Mitsubishi and Toyota. The portfolio would include some of the most popular brands including Fiat, Chrysler, Peugeot, Alfa Romeo, Jeep, Ram, Dodge, Maserati and Citroen.

“Fiat Chrysler Automobiles has been actively seeking a strategic tie-up. It was in talks with Peugeot S.A early in 2019 but later initiated the discussions with Renault. While FCA believed that Renault was a better strategic fit, the deal could not be materialized due to differences in opinion with key stakeholders in Renault i.e., the French government and alliance partner Nissan.

“The automotive industry is transforming and witnessing a rapid shift towards electric vehicles as well as other technologies like connected and autonomous vehicles. There are clear gaps in the product portfolio as well as the geographical footprints of FCA as well as PSA. Both companies have been lagging behind in terms of introduction of electric vehicles and do not have a strong presence in China, world’s largest automotive market. Moreover, sales volumes of both companies have been severely impacted due to COVID-19 pandemic and there are some capacity utilization challenges as well.

“The merger is prudent as both the companies have a much better prospect if they combine their strengths and resources. The merger would give them larger combined footprint in Europe and the US. Most importantly, FCA and PSA can share the burden of R&D and investments in future technologies and jointly come up with electric, autonomous and connected vehicles.”