Fiat Chrysler and PSA Group merger greenlit by EU – Roadshow

Peugeot 208

Could this merger mean we get more small cars in America? Future product questions are tough to answer right now.

Peugeot

We've known for almost exactly a year now that Fiat Chrysler and French automaker PSA were flirting with a merger. This potential tie-up could help both companies grapple with the ongoing COVID-19 pandemic and likely save them huge sums of money developing new vehicles, particularly more eco-friendly all-electric models.

Well, Reuters reported on Monday this corporate hookup is one step closer to becoming a reality. The European Commission has given this $38 billion transaction the go-ahead, an important hurdle to clear.

The all-share deal would create a new company called Stellantis, which sounds like the home planet of some alien race in a science-fiction franchise. What's not fantasy, however, is the money this combined entity could save. It's estimated synergies between the two automakers, which own popular brands like Jeep, Ram Truck and Maserati on the FCA side of the ledger, as well as Peugeot and Opel in PSA portfolio, could save as much at $6 billion annually. It's projected 20% of that total could come from areas like logistics and marketing, while the remaining 80% could be realized in product-related areas and purchasing.

Combined, these two companies could form the fourth-largest automaker in the world.

FCA/PSA

But perhaps more importantly, those savings could, reportedly, be realized without closing any manufacturing plants, something that's always a contentious issue, raising the ire of unions and governments alike.

Naturally, there are still some antitrust concerns and plenty of other loose ends to tie up regarding things like vehicle servicing, but the die appears to be cast. The merger between FCA and PSA could be completed as soon as the first quarter of 2021. Once the financial dust settles, newly formed Stellantis could be the fourth-largest automaker in the world.

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