Stellantis takes flight as PSA-FCA complete merger

Fiat Chrysler Automobiles (FCA) and Groupe PSA sealed their planned merger as scheduled last weekend, resulting in the creation of Stellantis, the world’s fourth-largest automaker. The US$52 billion (RM208 billion) merger has taken more than a year to accomplish, as both companies first announced plans to combine in October 2019.

The new entity, which will have an annual global production of around eight million vehicles and revenues of more than 165 billion euros (RM810 billion), is set to take the fight to larger rivals Toyota and Volkswagen. News reports indicated that shares in the new company were off to a good start during initial trading in European markets.

Currently, Stellantis has 14 automotive brands under its umbrella, with FCA represented by Fiat, Chrysler, Maserati, Jeep, Dodge, Ram, Alfa Romeo, Abarth and Lancia, and PSA by Peugeot, Citroen, Opel, DS and Vauxhall. However, it remains to be seen if any brands are dropped from the portfolio as the automaker makes the shift towards a new automotive era in which electrification will be the primary focus.

Prior to the merger, there was already talk about consolidating vehicle platforms, a move that will save the new company billions of dollars in engineering and manufacturing costs. Reportedly, this streamlining process could translate to job losses in Italy, Germany and Michigan as PSA technology gets integrated into North American and Italian vehicles. Rumours abounded that Chrysler was a brand that could possibly be axed.

According to FCA CEO Mike Manley, who will head Stellantis’ key north American operations, 40% of the expected synergies from the merger will come from convergence of platforms and powertrains as well as from optimising R&D investments, while more than a third of synergies would be driven by savings on purchases and another 7% would come from savings on sales operations and general expenses.

Both companies have previously pledged to not close any plants, and have said annual costs can be trimmed by over five billion euros (RM24.5 billion) without closures.

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