PSA Group and FCA talks progress with deal ‘likely in weeks’

26 November 2019

The merger between PSA Group and Fiat Chrysler Automobiles (FCA) could be completed in a matter of weeks as the two carmakers ramp up talks.

Two separate communications to staff, seen by news agency Reuters, suggested that more than 50 people were involved in the talks, which would create the world’s fourth-largest carmaking group and Europe’s second-biggest.

Nine working groups were established, led by FCA Group treasurer and global head of business development David Ostermann, and by PSA executive vice president program and strategy Olivier Bourges, the documents said.

GM issues

Talks are progressing despite the threat of a lawsuit from General Motors (GM) against FCA, over alleged bribery to union officials leading the US carmakers to pay higher fees to workers.

The Italian company has already said the lawsuit is ′meritless’ and an attempt to derail talks with PSA.

The two carmakers seem to have brushed off the threat and are continuing talks, although any potential fine will affect both businesses. The problem could be more than financial; however, with FCA’s US reputation likely to be tarnished should a court find in favour of GM.

One of the main selling points of the merger for PSA Group is FCA’s foothold in the US market, through its Jeep and Chrysler brands, with Fiat also selling well in the country. The French carmaker has long been looking to break back into America, with plans to begin selling Peugeot vehicles long touted.

Therefore, any dent in FCA’s standing would affect PSA Group plans to take advantage of the ′open door’ to its long-sought-after market.

Small revival

The French group’s platforms would also be of interest to FCA, with executives at PSA believing their small-vehicle underpinnings should be favoured.

′On smaller segments, PSA has the platforms which allowed the group to make the highest margins in Europe among all the automakers, so I find it reasonable that these platforms might be used in the future on some FCA models too,’ said Gaetano Thorel, PSA’s managing director for Italy.

Earlier this month, Fiat said it was looking to pull out of the small car segment, with its 500 and Panda models disappearing from showrooms, save for an electric version of the 500. The merger would allow the carmaker to save money by using PSA Group platforms.

This move would give the Italian company access to PSA’s Common Modular Platform, which underpins both the new Peugeot 208 and Opel Corsa. These models feature both traditional engines and battery-electric variants.