Merger News

FCA and PSA Group approve merger to become world's 4th-largest automaker

The boards of FCA and PSA Group have approved a merger between the two companies.

Photo courtesy of Fiat Chrysler Automobiles N.V.

Earlier this year, Fiat Chrysler Automobiles N.V. nearly merged with Renault. Now, the boards of FCA and PSA Group have agreed to join forces using a 50-50 share swap.

Combined, the company will be worth $50 billion and be located in the Netherlands, where FCA currently has its head office. It will have stock listings in Paris, Milan, and New York. The combined company will maintain a significant presence in their current operating head-office locations in France, Italy and the US.

The new company's board will consist of 11 members. PSA's Carlos Tavares will be the company's CEO and a member of the board while FCA's John Elkann will be chairman of the board.

A joint statement from the companies cited a, "rapidly changing environment, with new challenges in connected, electrified, shared and autonomous mobility," as the reason for the merger and expressed how that, "the combined entity would leverage its strong global R&D footprint and ecosystem to foster innovation and meet these challenges with speed and capital efficiency."

Last year, the company had combined sales of 8.4 million vehicles. PSA Group does not currently have a footprint in the U.S. though they have expressed wanting to do so over the past few years, even going so far as to establish an office in Atlanta, Georgia. Much of PSA Group's sales strength is in Europe while FCA is strongest in North and South America.

The company will be able to utilize manufacturing strategies that will have $4.124 billion in estimated annual run-rate synergies. The automakers say this will come from a shared allocation of resources for large-scale investments in vehicle platforms, powertrains, technology, and purchasing capability. Eighty percent of these synergy are expected to be acheived after four years at a one-time cost of $3.118 billion.

No plants will be closed.

FCA brings the Fiat, Dodge, Ram, Chrysler, Jeep, Alfa Romeo, and Maserati vehicle brands to the table. PSA Group owns Peugeot, Citroën, DS, Opel, and Vauxhall. Both companies have a number of investments in third-party mobility and technology companies.

There is currently no public proposal of a forthcoming name change as the automakers form the joint company.

The RS Q3 is Audi's most performance-focused variant of its subcompact SUV.

Photo courtesy of Audi AG

The spunky 400-horsepower Audi RS Q3 is not coming to the U.S. according to a report by CarBuzz. Mark Dahncke, Director, Communications, Audi of America, confirmed the news to the outlet.

The move isn't unprecedented. Though growing in popularity stateside, the automaker doesn't bring all of its sportiest variants to the U.S. market. Audi has only recently began opening the floodgates with the announcement that the U.S. will get the RS Q8, SQ7, and SQ8.

2021 Audi RS Q3 The car can pack a punch, but isn't slated to be sold in the U.S.Photo courtesy of Audi AG

Unlike in Europe, there are none true sport versos of subcompact SUVs sold in the U.S. Dahncke pointed to a lack of demand for that style vehicle when talking with CarBuzz.

A big part of that argument is cost. Bringing a RS Q3 to the U.S. could make its MSRP around $55,000. That price tag is generally reserved for much larger SUVs in the land of the free whose residents are known for preferring larger vehicles than Europeans.

Here's what Americans are missing out on.

The RS Q3 has an inline 2.5-liter five-cylinder engine user the hood that powers its subcompact body. At its peak it reaches 354 pound-feet of torque. The engine is paired with a seven-speed dual-clutch transmission and comes standard with all-wheel-drive. The SUV can get to 62 mph from a standstill in 4.5 seconds with a top speed of 155 mph.

Audi has equipped the model with McPherson struts up front, a four-link rear suspension, and a dual-circuit brake system.

Negotiations are underway as part of the closing elements of the FCA-PSA Group merger.

Photo courtesy of FCA-PSA

In an interview with Reuters, Michael Manley, CEO of Fiat Chrysler Automobiles said merger talks are progressing well with PSA Group but that it may take 12-14 months before a deal is complete.

Late last year, the two companies agreed to a $47 billion merger to create the fourth largest automaker in the world by volume and the third largest by revenue. Using 2018 tallies, the two companies accounted for a combined 8.7 million vehicle sales.

The comments reiterate the timeline Manley had publicized after the deal was signed in December, signaling an early 2021 merger completion date.

In December, a news release issued by the companies indicated that there are no plans to close any factories and that the company expects to be cash flow positive from the get-go.

Americans should expect at least 13 vehicle brands to be caught up in the FCA-PSA merger but persons worried about the fate of Chrysler and Dodge should be comforted by side comments made by PSA personnel this week at indicated that the merger will not include the loss of the historic nameplates, at least right away.

Current negotiation points in the merger include how the variety of the companies' platforms will work on vehicles made by the combined automakers, and where shared resources in regards to underpinnings, powertrains, etc. can benefit the company as a whole.