Fiat Chrysler-PSA to become Stellantis as EU approves $38 bn merger
30 December 2020
Italian carmaker Fiat Chrysler and its French rival Groupe PSA will merge to become a new company, called Stellantis, as the two carmakers on Monday secured approval from European Union anti-trust regulators for their $38 billion merger.
The merged entity, to be called Stellantis, will be the world’s fourth-largest carmaker after Toyota, Volkswagen Group and Hyundai / Kia, relegating General Motors to fifth position.
The EU had concerns that FCA and PSA would dominate Europe's van market with a combined share of 34 per cent, heavily outgunning Renault and Ford, each with a 16 per cent share, Volkswagen with 12 per cent and Daimler with 10 per cent.
This dominance could mean higher prices for customers, the Commission said.
To address EU concern, PSA had offered to increase production capacity for Toyota at its Sevelnord large van factory in France. PSA also builds a compact van for Toyota called the Proace City in Vigo, Spain. PSA will supply Toyota with an electric version of the van.
The two carmakers are looking to the deal to help them tackle the industry’s dual challenges of funding cleaner vehicles and the global pandemic.
The merger approval from the European Commission is conditional on PSA continuing with its agreement with Toyota Motor by increasing capacity for Toyota and cutting transfer prices for the vehicles, spare parts and accessories.
“Access to a competitive market for small commercial vans is important for many self-employed and small and medium companies throughout Europe,” European Competition Commissioner Margrethe Vestager said in a statement.
Fiat and PSA will also allow rivals to access their repair and maintenance networks for vans to help new entrants expand in the market, the EU competition enforcer said.
The merged entity, to be called Stellantis, would own brands such as Fiat, Jeep, Dodge, Ram and Maserati as well as Peugeot, Opel and DS.
“FCA and Groupe PSA warmly welcome the European Commission’s clearance authorizing the merger and the creation of Stellantis, a world leader in new mobility,” the companies said, adding that the shareholders of both companies will meet separately on Jan 4 to approve the transaction.
“The closing of the merger is expected to occur by the end of the first quarter of 2021”.
FCA’s controlling shareholder is Exor, the holding company of Italy’s Agnelli family while PSA’s investors are the Peugeot family, the French government and China’s Dongfeng.
Peugeot SA and Fiat Chrysler Automobiles NV had in November revealed the logo of Stellantis, the new group that will result from their 50:50 merger.
The new logo symbolises the rich heritage of Stellantis’ founding companies and the unique combined strengths of the new group’s portfolio of 14 storied automotive brands, as well as the diversity of professional backgrounds of its employees working in all the regions. Along with the Stellantis name – whose Latin root “stello” means “to brighten with stars” – it is the visual representation of the spirit of optimism, energy and renewal of a diverse and innovative company determined to be one of the new leaders in the next era of sustainable mobility.
The unveiling of the logo is the latest step towards the completion of the merger project, which is expected to occur by the end of the first quarter of 2021, subject to customary closing conditions, including approval by both companies’ shareholders at their respective Extraordinary General Meetings and the satisfaction of antitrust and other regulatory requirements.
Fiat Chrysler Automobiles (FCA) is a global automaker that designs, engineers, manufactures and sells vehicle brands, including Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, Ram and Maserati.
It also sells parts and services under the Mopar name and operates in the components and production systems sectors under the Comau and Teksid brands. FCA employs nearly 200,000 people around the globe.
Groupe PSA designs unique automotive experiences and delivers mobility solutions to meet all customer expectations. The Group has five car brands, Peugeot, Citroën, DS, Opel and Vauxhall and provides a wide array of mobility and smart services under the Free2Move brand. Its ‘Push to Pass’ strategic plan represents a first step towards the achievement of the Group’s vision to be “a global carmaker with cutting-edge efficiency and a leading mobility provider sustaining lifetime customer relationships”. An early innovator in the field of autonomous and connected cars, Groupe PSA is also involved in financing activities through Banque PSA Finance and in automotive equipment via Faurecia.
Fiat Chrysler Automobiles, meanwhile, announced plans for setting up a global digital hub In Hyderabad. Called the FCA ICT, the company will be investing around Rs1,102 crore in its latest operations.
FCA ICT in Hyderabad will be the largest digital hub outside of North America and EMEA.
It will focus on connected car suites, artificial intelligence, data acceleration and cloud technologies.
Commenting on the latest development, Partha Datta, president and managing director of FCA India, said, “FCA ICT India will be our technology backbone that will not only help us develop products for future mobility but will also sharpen our efforts to enhance customer-centricity. This is a significant step forward in realising our vision to make our Indian operations more capable to develop digitally driven products and technologies locally for India and also for the world.”