Daily Management Review

Fiat And PSA In A Possible ‘$50 Billion’ Tie-Up Talks


Fiat holds merger talks at a time when the auto industry sees dwindling demand as oppose rising cost of emission reduction technologies.

Fiat Chrysler and “Peugeot owner PSA” are in talks about a possible “tie-up” which could give “create a $50 billion car giant gathered pace”, while one source reported by this week itself we could get an official announcement about the same.
Both the groups came out with separate statements to inform about their ongoing discussion for creating the “world’s leading auto makers” with better capability of tackling “costly technological and regulatory challenges” thrown at the auto industry across the globe.
Post quitting the Renault merger in June, FCA Chairman, John Elkann had informed that the company will look into alternative proposals to deal with costs regarding “in electrification, emission reduction and autonomous driving technologies”.
However, FCA-PSA collaboration will have to deal with “substantial challenges” while the auto industry is facing “a global downturn in demand” while they need to invest in “low-emission technologies” as the “deadlines to meet ever more stringent anti-pollution rules loom”.
In the words of Senior Equity Analyst at Morningstar, Richard Hilgert:
“We view the combination of these two companies as reasonable given global competition, high capital intensity, and industry disruption from electrified powertrain as well as autonomous technologies”.
Moreover, Reuters received the information from a “French finance ministry” that France is keeping a close eye on the merger talks while the focus remains on “governance matters” as Paris holds a twelve percent stake in PSA through BPI.
The above mentioned merger talks are taking place as the auto manufacturers needs to meet “tough carbon dioxide emissions targets”. In fact, FCA doesn’t have “adequate green technology”, whereby it will be paying Tesla in “hundreds of millions of euros” as emissions credits. While Reuters added:
“It has also announced a 5-billion-euro investment plan in Italy to 2021, to help the group launch its first electric and hybrid models, revamp luxury brand Maserati and fill capacity at its Italian plants.
“FCA’s first full-electric model, the small 500 BEV, is scheduled to reach customers next year”.
Nevertheless, is the merger is successful then FCA can avail the “CMP modular platform” PSA.