FiatChrysler Automobiles (FCA) and Peugeot S.A (PSA) are merging to create the 4th largest OEM in volume terms. More detail below…

FCA and PSA have signed a Combination Agreement that will result in the automotive giants merging in an effort to be at the forefront of a “new era of sustainable mobility”. When complete, the new entity will be the 4th largest OEM by volume (8.7 million units) and the 3rd largest by revenue (€170 billion) with an expected operating profit of over €11 billion (6.6% profit margin). More so, estimated synergies are expected to be cash-flow positive in the first year.

By combining financial strength and skills, the new entity will be able to provide innovative and sustainable mobility solutions while leveraging the efficiencies derived from larger volumes. The vehicle portfolio will be broad including mainstream passenger cars, luxury and premium vehicles, SUVs, Light Commercial Vehicles (LCVs) and trucks. More than two-thirds of the run-rate volume will be focused on 2 platforms with approximately 3 million units expected to be produced per year on each ofthe small and compact/medium-size platforms.

Carlos Tavares, Chairman of the Managing Board of Groupe PSA, said: “Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services. I have every confidence that with their immense talent and their collaborative mindset, our teams will succeed in delivering maximized performance with vigor and enthusiasm.”

Mike Manley, Chief Executive Officer of FCA, added: “This is a union of two companies with incredible brands and a skilled and dedicated workforce. Both have faced the toughest of times and have emerged as agile, smart, formidable competitors. Our people share a common trait – they see challenges as opportunities to be embraced and the path to making us better at what we do."

The merger is expected to be completed in 12-15 months, provided that several conditions are met. We will keep you updated as this story develops further.