It’s obvious Fiat Chrysler Automobiles (FCA) needs a partner to be more successful worldwide.
They tried a partnership with Renault in June, but that company’s woes, vis-a-vis former chairman Carlos Ghosn, scotched the merger between the two – as did the French government. Now talks are being held between FCA and the PSA Group responsible for Peugeot, Citroen, DS and OpelVauxhall vehicles.
A merger between FCA and PSA would create a company with about $47 billion market value. The government of France, which is a major PSA shareholder (as well as a 15 percent holder of Renault shares) would have a large voice in accepting or rejecting any such deal; they were a big part of the lapse of talks between FCA and Renault.
PSA has been out of the US market for about 30 years, since Peugeot left in the early 1990s. Such a move would give PSA access to FCA dealerships, much as Alfa-Romeo did when rejoining the US marketplace in partnership with FCA. Carlos Tavares, a former racecar driver, would be the CEO of the combined companies. He’s been urging PSA to recommit to the US market.
We’ve seen quite a few partnerships within the retail automotive market over the past few years. Toyota and Mazda are sharing some vehicle platforms and General Motors is co-developing autonomous vehicles with Honda. Volkswagen and Ford are working together on on electric vehicles (EVs) and autonomous cars. Toyota continues to work with Chinese automaker BYD Co. in developing both EVs and batteries for EV cars.
While many say this is another effort to milk the successful Jeep off-road market worldwide, FCA has need of fuel-sipping vehicles now that it has jettisoned the small Fiat 500 sedan. PSA has plenty of smaller, fuel-efficient vehicles that could help FCA meet Federal strictures in the coming years.
Tavares has successfully turned around moribund Opel over the past few years after GM jettisoned that brand – remember Opel cars briefly marketed as Saturn vehicles before the Saturn market died? It remains to be seen whether French politicians will allow this proposed merger.