PSA in good shape for merger with FCA

Following the news that PSA Group has posted a positive profit result for the first half of the year despite the heavy impact of the COVID-19 pandemic and much reduced revenue;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

“PSA has been working on reducing its break-even point over a long period of time, which helps to explain its relatively positive results. The company posted record profit last year and was in pretty good shape coming into the crisis.

“It has also taken steps to reduce stock levels this year, which puts it in a good position as market demand picks up in the second half of the year, especially in Europe – helped by targeted government stimulus packages in automotive markets such as France.

“The business rationale behind the merger of PSA and FCA remains intact at this point. The two companies can eye considerable synergies and also efficiencies in investment strategies after the planned merger to create Stellantis in 2021.

“Further restructuring within the larger group is likely to follow at some point, but the priority right now is to get through the COVID-19 crisis and establish the new entity in the first phase. After a period of operation, a review of performance, operational or functional overlaps, regional manufacturing footprints in the context of overall group strategy can take place.

“These results suggest that despite the crisis impacting the whole industry, PSA is in good shape for the merger with FCA.”

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