Fiat Chrysler And PSA Group Reportedly In Merger Talks

Fiat Chrysler Automobiles and PSA Group are reportedly in talks about a potential merger that could create a trans-Atlantic auto giant.

Citing sources familiar with the matter, Wall Street Journal reports that one of the possibilities the two sides are discussing is an all-share merger of equals. In this case, PSA’s Chief Executive Carlos Tavares could become the CEO of the merged car makers, while John Elkann, FCA’s Chairman would assume the same position at the new company.

The sources also said that talks between Fiat Chrysler and the PSA Group are fluid at this point, with other options still under consideration. That means that there are no guarantees that the two car makers will eventually shake hands.

The reported talks come just months after Fiat Chrysler Automobiles withdrew its offer to merge with Renault, a deal that fell apart after the French government, which owns a 15 percent stake in the company, and alliance partner Nissan didn’t back the proposal.

Since then, Fiat Chrysler Automobiles left open the door to Renault in order to resume talks but to no avail. Peugeot-maker PSA Group had reportedly approached FCA earlier this year about combining the two companies but Fiat-Chrysler declined the offer.

A union between Fiat Chrysler and PSA Group would create a huge auto group with added scale and cost-cutting capability. The two car makers sold a combined 8.7 million vehicles last year, which would have ranked their potential fusion at fourth place, just ahead of General Motors, which sold 8.4 million vehicles.

PSA’s Tavares has expressed his interest into expanding in the US, a region where the French car maker has been absent for almost three decades. A tie-up with Fiat Chrysler could accelerate these plans and help gain a much wider access to the US market.

Fiat Chrysler would also gain more exposure to Europe, as PSA sold there 2.5 million vehicles there compared to FCA’s one million vehicles. A combined Fiat Chrysler- Peugeot Citroen company would sell almost as many vehicles in Europe as Volkswagen, which holds the region’s first place with a 24 percent market share.

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