By on October 29, 2019

It’s almost like celebrity gossip these days. Except instead of trying to see who’s seated next to Taylor Swift or Selena Gomez at a swank joint on the Sunset Strip, we’re looking to see who’s chatting up Fiat Chrysler at the party.

The Wall St. Journal is reporting that Fiat Chrysler Automobiles and PSA Group of France are in talks to merge.

One possibility? An all-share merger of equals, with current PSA CEO Carlos Tavares taking the lead role and FCA chairman John Elkann remaining in the same role at the merged company.

FCA shares jumped by more than 7 percent to $14.18 in late afternoon trading, according to Automotive News. PR flacks from both companies declined comment.

FCA has seemingly been looking to go from single to cuffed since 2015, with failed overtures to General Motors and Renault along the way. A pairing with PSA would make sense, giving the combined company about 9 million units in production per year, while also helping bolster both companies’ small-car presence in key markets. Perhaps most importantly, such a merger would help pave the way for Peugeot’s planned return to America.

PSA had already played footsie with FCA once this year, before FCA had its failed flirtation with Renault.

Talks are “fluid” with all options seemingly on the table. As is often the case, there’s no guarantee that batted eyelashes and well-timed laughs will translate into a final agreement. Renault and FCA could even reopen talks should nothing come out of this.

Consolidation talk is often rumored, as automakers look to cut costs via sharing, while also adding scale and gaining exposure to new markets (or strengthening positions in existing markets – FCA could see benefits in Europe should this deal be sealed). Just like a junior-high dance, companies awkwardly talk with one another, even if partnerships don’t manifest.

Fiat Chrysler could probably use the boost in Europe, and PSA would likely love to use FCA’s dealer network to gain a foothold in America. On the other hand, mergers are complicated, and both PSA’s previous overture and FCA’s offer to Renault ultimately fell apart. The former failed in part because of concerns with a deal being financed by PSA stock and in part because FCA wasn’t sure it wanted more exposure to Europe. The latter failed because it wasn’t fully backed by the French government, a key stakeholder in Renault.

Meanwhile, the timing of any potential merger could impact ongoing labor talks between FCA and the United Auto Workers. Merging two into one is, as they say, complicated.

 

[Image: Daniel J. Macy/Shutterstock]

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62 Comments on “Fiat Chrysler and PSA Flirting With a Merging?...”


  • avatar
    Master Baiter

    Let’s take two companies that make crappy cars; merge them. The result will be…

    Product excellence!

    • 0 avatar
      dwford

      Literally that’s what FCA means already: Fiat-Chrysler. And back in the day Chrysler merged with American Motors (which was already partnered with Renault). So there is a long history of trying to combine 2 terrible automakers to make one good one.

    • 0 avatar
      redapple

      To The guy who beats off

      Ram Pick Up
      Wrangler.
      300S
      Pacifica/Minivans
      Grand Cherokee
      Challenger

      Yep. FCA. Nothing but Junk.

      • 0 avatar
        darex

        Nearly always the lowest reliability brand in North America, plus Europeans don’t buy the ancient 300S, Pacifica, or Challenger, and only buy Ram and Grand Cherokee in limited amounts/specific markets. PSA very interested in the dealer network, but probably has very little interest in FCA’s product portfolio, except Alfa.

  • avatar
    SCE to AUX

    “…PSA would likely love to use FCA’s dealer network to gain a foothold in America”

    That would lead to certain failure.

    1. The US market is saturated with too many players, and is shrinking.
    2. PSA would probably anchor in the dying Fiat showrooms, multiplying the bad karma.
    3. Of PSA’s brands (Peugeot, Citroën, DS, Opel and Vauxhall), at least 3 of them (IIRC) were formerly in the US market and left. What genius thinks they could succeed where Fiat failed in its return?

    FCA has a few strong brands in the US market (Jeep, RAM, and arguably Dodge); it does not need a boat anchor like PSA to hurt it.

    • 0 avatar
      Hummer

      This, nothing in PSAs portfolio is a worthwhile venture to America. There’s no products interesting enough to open doors on a new brand. They have a few crossovers that would fade into the bland sea of current crossovers on the market, but at best they should be rebadged as Dodges, Chrysler’s, or Jeeps.

      • 0 avatar
        Victor

        PSA is Dongfeng. It makes a lot of sense that Dongfeng would want to access the US market, while getting Jeep and maybe the italian panache Alfa holds. Also Fiat and Chrysler failed miserably oh so many times in trying to get a slice of the chinese market. PSA/Dongfeng might make it happen.

        • 0 avatar
          Lorenzo

          Dongfeng owns 13.68% of PSA stock, the same percentage as the Peugeot family stake. That’s also the percentage of the French state ownership. As with Renault, government ownership is key.

          The unwillingness of France to back the Renault merger will probably happen with PSA too. The bottom line is, FCA is 1-1/2 times the size of PSA, with a bigger market and bigger profits from a growing share of its main market.

          PSA’s markets in Europe and Africa are far less stable – that’s why PSA wants the merger. The only reason FCA wants a merger is to get the Agnelli family’s cash cow, Exor, out of the high-capital/low-profits auto business.

    • 0 avatar
      highdesertcat

      “FCA has a few strong brands in the US market (Jeep, RAM, and arguably Dodge); it does not need a boat anchor like PSA to hurt it.”

      But these are two financially-troubled automakers desperately trying to remain relevant and competitive, if not alone, then maybe through a merger.

      Rather than a European automaker, a better solution would have been Fiatsler and GM. But that was a no-go from the onset.

    • 0 avatar
      dwford

      Imagine the possibilities: you could have a rebadged Opel Astra (we know it as the Chevy Cruze) as the new Dodge Dart. Or maybe Buick Regal (Opel Insignia) could have a second life as a new Chrysler 200 once Buick kills it off.

  • avatar
    R Henry

    I believe the US market has already spoken with regard to cars from France. The words were something like: “Take your weird Gallic shyt back to Europe!” or somesuch….

    Could some synergies in platform and powertrain development be realized? Perhaps, but methinks there is too little institutional will on either side of the table to make that happen effectively.

  • avatar
    Jeff S

    If this happens there will not be a Chrysler or a Dodge brand left. The value of FCA is Jeep and Ram the rest is fading away. Don’t see what PSA brings to the table except its size.

    • 0 avatar
      brn

      They’re still dominant in the minivan market.

    • 0 avatar
      Robotdawn

      I’d either re-badge about 8 cars/SUVs from PSA as Dodges and Chryslers immediately or discontinue the brands entirely and replace them with nameplates from Europe.

      The Dodge, Chrysler, Ram, Jeep (sometimes Fiat) showrooms are crowded already, and cars are almost ignored on their lots for Rams and Jeeps. Putting another couple brands on the same sales floor is a recipe for disaster.

  • avatar
    CKNSLS Sierra SLT

    I don’t know about the reliability aspect but after spending time in Europe their small cars and very popular. In addition- for those having bucks in Denmark and a few other places-I saw some beautiful Peugeot CUVs.

    In been noted before on this forum before there is not much world travel by others……who post.

  • avatar
    indi500fan

    Bigger is sometimes better, but more often worse.
    FCA plus PSA sounds like the latter to me.

    It’s impressive to me that Honda and Toyota have remained fairly competent despite massive growth over the last 4 decades. Although most all of their growth has been internal rather than purchased.

  • avatar
    gasser

    IDK if such a merger might help in Europe, but I can’t understand how it would help Chrysler-Fiat in the USA. Is there any PSA car so compelling that it could sell well here??? How about trained service personnel and a back stock of parts? As to CUVs, there does not seem to be a pressing shortage here. Lastly, as to vehicle choices, we are again seeing two separate markets, one based on $8/gallon gas and one based on $3/gallon gas. I’ll keep my middle sized SUV/CUV thanks very much.

  • avatar
    CKNSLS Sierra SLT

    Gasser-
    Yes-this one with compatible power trains for American’s taste-

    https://www.peugeot.co.uk/showroom/5008/suv/

    • 0 avatar
      Hummer

      So a minivan that looks exactly like a Honda Pilot, except instead of a 280HP V6, it has a 131HP 1.2L? Oh and typical euro reliability?

      Dude what are you smoking?

      • 0 avatar
        CKNSLS Sierra SLT

        Hummer-

        I wasn’t clear. It would have to come with power trains acceptable to American’s tastes. That’s what I meant.

        And I don’t smoke. Thar is actually a nice looking CUV-as I have seen them in person.

      • 0 avatar
        dal20402

        This is a size class smaller than a Honda Pilot, although it has a third row, and would come in the US market with the 1.6T that is the uplevel engine option in Europe, and maybe a 2.0T option. It would be like a Ford Escape with better packaging.

      • 0 avatar
        FreedMike

        “Euro reliability” was a highly relevant issue for 1978 Fiats; it’s not as relevant now.

        • 0 avatar
          Hummer


          “Euro reliability” was a highly relevant issue for 1978 Fiats; it’s not as relevant now.

          Didn’t we just have an article a few weeks back about a V10 6 speed BMW? I’m sorry that should have been the most reliable car drivetrain to make and it has horrid reliability.

          • 0 avatar
            FreedMike

            So, because that particular car is a maintenance nightmare (which should be expected – it’s basically an exotic), all European cars are maintenance nightmares?

            Nope. European cars may be less reliable than, say, a Corolla, but wouldn’t you say that reliability today is a whole different ballgame than it was 20-30 years ago?

          • 0 avatar
            Hummer

            “ but wouldn’t you say that reliability today is a whole different ballgame than it was 20-30 years ago?”

            No not really, my 96 Z71 I got in high school didn’t have a single problem til the day I traded it in, neither did my parents suburban. Dads Ramcharger leaked oil but I don’t ever remember it being problematic enough to have fixed. Moms Taurus was reliable as well.

            The only reliability issue I remember from relatives is an uncle that bought a new Audi that had so many problems that it was the last.

          • 0 avatar
            Hummer

            “ but wouldn’t you say that reliability today is a whole different ballgame than it was 20-30 years ago?”

            No not really, my 96 Z71 I got in high school didn’t have a single problem til the day I traded it in, neither did my parents suburban. Dads Ramcharger leaked oil but I don’t ever remember it being problematic enough to have fixed. Moms Taurus was reliable as well.

            The only reliability issue I remember from relatives is an uncle that bought a new Audi that had so many problems that it was the last.

            There’s no reason to touch a euro today, most of the interesting stuff is over priced and continues the stereotype of European unreliability and the rest of it is more vanilla than a beige Camry and have drivetrains that aren’t acceptable in a 1996 Cavalier.

            I don’t see Corvettes being maintenance nightmares yet it can easily keep up with these exotics? Being an exotic isn’t a reason for being unreliable when it’s based on a non exotic platform.

          • 0 avatar
            FreedMike

            So you don’t think cars are more reliable today because you had a reliable truck that was reliable 20 years ago. And European cars are unreliable because a quasi-exotic car like a BMW M-coupe is going to cost a fortune to fix.

            Okay…

            So, if we’re going anecdotal, I’m now on my fourth European car – two VWs, an Audi, and a Volvo – and they’ve all been acceptably reliable. Meanwhile, I had two Mazdas, one of which was rebadged as a Mercury, and its’ engine grenaded itself at 70,000 miles. Therefore, Japanese cars are junk.

          • 0 avatar
            Hummer

            “ been acceptably reliable”

            That’s some odd terminology. It’s either reliable or it’s not, things either break or they do not. The car never goes to the dealer outside of oil changes, filters and the like, or it does.

            How is an M-coupe a quasi exotic car? A CTS-V isn’t considered quasi exotic? That M is a damn car that’s happens to have shoddy build quality and engineering.

            I’m not saying cars are any less or anymore reliable today than they were 20 years ago, if you buy vehicles known for shoddy engineering you get the expected product.

    • 0 avatar
      ajla

      I don’t think an entire merger is worth it just to field an uphill battle in the Outlander/Journey segment.

      I expect that if this merger does take place the plan is not to cross-breed the current lineups, but to share future platform and powertrain development costs. So it will probably take some time before any real results are seen.

  • avatar
    thejohnnycanuck

    So a Frenchman, an Italian and an American walk into a bar…

    Sorry, I don’t have a punchline but at least no one has uttered the phrase “a merger of equals”.

  • avatar
    87 Morgan

    Ugh.
    It is seems like a FCA merger is imminent, we just don’t know with whom yet and with each scuttled attempt the next potential partner seems a measurably worse choice than the previous. Shame really as I fear we will be left with another merger of ‘equals’ that results in poor products, excessive debt, and ultimately job losses.

    • 0 avatar
      Lorenzo

      No, nothing is imminent. This is a bad time for a merger, with a possible strike against FCA, and more fines on FCA for its part in the corruption probe with the UAW that’s still ongoing. The French government is another obstacle, owning 13.68% of PSA. They sank the FCA-Renault merger by refusing to provide financial backing, and they’ll do the same with PSA.

      The one merger nobody mentions is PSA and Renault, with the French government owning a piece of both. That would be two drowning men holding onto each other, while FCA’s increasing market share in a stable North American market looks like a lifeboat to both. The American economy is booming, unlike Europe, where four countries in the economic union are mired in debt, and another country is trying to get out.

  • avatar
    CKNSLS Sierra SLT

    Hummer-

    I wasn’t clear. It would have to come with power trains acceptable to American’s tastes. That’s what I meant.

    And I don’t smoke. Thar is actually a nice looking CUV-as I have seen them in person.

  • avatar
    Jeff S

    The only real benefit to FCA would be platform sharing. I don’t see the Dodge and Chrysler brands surviving much longer after the Challenger, Charger, 300 (aging platforms). The Pacifica could always be rebadged as something else but I doubt the Caravan will survive too much longer. For PSA it would be a re-entry to the US market but the question would be would their products sell in the US or would it be a repeat of Fiat? I doubt this is the end of global auto mergers. We will see more cost cutting, closing of plants, and more consolidation. More automation will make production more efficient requiring less labor but more capital spent to modernize.

  • avatar
    kkop

    This would be the end of the Chrysler part of the new merged entity. No good ever comes from merging with a French company that is in large part owned by the government.

    KLM, a Dutch airline and Air France went through a similar exercise. In the intervening 15 years, the Dutch part of the business has made difficult decisions to return to profitability and remain there. The French part in the meantime has been losing money, resisting change and striking left and right. Money is being moved to prop up Air France, while bleeding KLM dry. Management will always be French, even when it becomes clear they are grossly incompetent.

    A recipe for disaster. FCA would be better off remaining independent.

  • avatar

    just another shell game by the banks who control the Boards, which allows them to rape the corps of capital.

    see “Frenzied Finance” by Thomas Lawson of Boston.

  • avatar
    indi500fan

    Here’s a marketing thought.
    French cars are known for plush riding suspensions. (Is that still true?)
    Given some of the roads in the US, this could be a sales plus.

  • avatar
    FreedMike

    Y’all are looking at this as a North America deal. On that basis, it doesn’t make all that much sense – the only party that benefits is PSA. Leaving all the French/Italian car jokes aside, though, I think this makes sense for both companies if you look at the combined company internationally.

    Take a look at Fiat and Peugeot’s European websites and you’ll see where this pays off for FCA – PSA makes a far broader line of cars than Fiat does. Fiat’s European lineup basically consists of the 500, 500X, Panda (subcompact CUV). Tipo (a compact car), and some vans. That’s it, and it’s all looking pretty old. Peugeot’s line actually looks a lot like circa-2017 Ford, just without pickups – subcompacts, compacts, midsizers, small and larger CUVs, and vans.

    So…

    1) Assuming Chrysler and Dodge continue, PSA’s line solves SA solves the Chrysler/Dodge problem.
    2) PSA gets access to the North American market, and gets Jeep and Ram.
    3) PSA also gets luxury nameplates (Alfa/Maserati).
    4) The two companies get to consolidate European operations.
    5) A bigger combined company has more chance of success in China.

    Plus, who else here thinks it’s “merge or die” in the auto industry?

  • avatar
    Arthur Dailey

    The automarket is global.

    Can anyone name an automotive manufacturer which is profitable based solely on car sales in North America? Perhaps Subaru and Honda come the closest to this. Certainly not the remaining ‘domestics’.
    Ford’s ‘cash cow’ is truck sales in North America, however Ford has previously announced that it is basically leaving the ‘car market’.

    However there is a significant number of automotive manufacturers who are quite successful and profitable either without any or with a very limited exposure to the North American market.

    So those posters focusing on how this impacts the USA (and Canada) are ignoring the major factors behind any potential merger(s).

    Aside from that, as others have noted, the involvement of the French government is the crucial aspect. French bureaucrats will have their fingers all over any decision. And that is not ‘good for business’.

  • avatar
    ToolGuy

    Serious comment: This might actually happen. It could potentially make sense.

    Snarky comment with a kernel of truth: “PSA would likely love to use FCA’s dealer network”… Not even FCA loves using FCA’s dealer network.

    Throwaway comment: No more mergers allowed unless the top of the building is reshaped into the new logo – every time.

  • avatar
    28-Cars-Later

    We looked at “fail” in the Urban Dictionary and we said, you know what we don’t want to “fail” we want to take the concept of “fail” to an entirely different paradigm. We want people to view our fail with awe and astonishment, and simply say you fine sirs have forever elevated the concept of “fail” to an incarnation altogether uniquely new to this plane of existence. Bonjour!

    • 0 avatar
      FreedMike

      Right, but if this fails, it will be because of poor product execution. And I’d say that both of these companies have earned their poor reps for that fair and square.

      But, setting that aside (or assuming that they turn heir reps around), I actually think the basic concept behind the merger makes a ton of sense for both manufacturers. PSA gets access to the American market and Jeep/Ram, and FCA gets access to a far broader range of platforms, which means, for starters, that if Dodge and Chrysler are to live on, they will get a fresh set of stuff to sell. FCA gets cheaper stuff to sell if the economy goes in the toilet. PSA gets two luxury brands to develop. Both companies get to centralize their development. The idea here makes sense. From there, it’s all execution.

  • avatar
    Jerome10

    French and Italians and Americans working together??!! Ha good one.

    I get why this might make sense.

    I don’t foresee good things from it. You could have argued Daimler-Chrysler made a lot of sense too.

    FCA should just sell off RAM and Jeep to whichever company will pay the most and fold the rest. Why bother?

    Fiat and PSA can go back to their European sandbox and fight over the scraps left by VW and the rest of the Germans in a dying auto market.

    I’m sure someone will be interested in buying the Auburn Hills Tech Center as well.

    What else do they really have?

    This feels like a merger for a merger’s sake. FCA taking any old dancing partner willing to take a spin and the French are apparently the suckers.

    • 0 avatar
      highdesertcat

      Jerome10, they agreed to merge. It was announced in the WSJ a half hour ago.

      • 0 avatar
        28-Cars-Later

        Funny ten or fifteen minutes ago I read an article which didn’t reflect that, must have missed the update by a few minutes. Crazy world. Somehow I just knew it was going to be PSA and FCA because I didn’t see a Chinese merger in the cards. Mazda could have kind of worked maybe, but I didn’t see that either, and I knew Hyundai wasn’t happening.

        You predicted a need for consolidation in 2014 and you were right. You kicked the can on the good DaimlerChrysler stuff, putting the Agnellis in the best position without them investing too much of their own fortune, and sold a hell of a lot of product while acknowledging your misses too (oh and getting D.C. from the Feds for free was also fracking brilliant in hindsight).

        Well played Sergio, well played. RIP, sir.

        • 0 avatar
          highdesertcat

          28CL, they said it should result in becoming the world’s 4th largest automaker.

          And that bump in status COULD lead to greater acceptance, even in the US (maybe).

          So, if President Trump gets his way, will we see French cars being made in the US? And is there even a market for those quirky Euro-mobiles?

          • 0 avatar
            28-Cars-Later

            I’ll quote myself from below, “not as if VW has ever taken off, why would Peugeot?”

            I’ll be looking for a regional cull of marques if not full blow retirement of some of them. PSA might build some of its own stuff here but they will sell as Dodges. I realize we already saw this movie with the Dart but I suspect there’s a sequel coming.

          • 0 avatar
            Arthur Dailey

            Oh but VW did ‘take off’. Just check how many vehicles they sold circa 1958 to circa 1974.

            Things went downward for them with the increase in Japanese imports.

          • 0 avatar
            28-Cars-Later

            Good perspective Arthur.

  • avatar
    28-Cars-Later

    PSA gets an instant dealer network and further reaps profit centers like LX, JK/JL, WK2, and whatever the truck ones are called. FCA gets… *other than the Agnellis getting out of Fiat at a gain*, I’m stumped here. FCA products for the most part aren’t gonna sell in Europe except for the Fiat derived ones and well Fiat is selling those already. The various Italian semi-luxury/sporty marques I guess are a benefit but then again when you’ve got zee German Opel do you need another luxury marque? From the standpoint of the -Chrysler- part of FCA there’s little there for them.

    Prediction(s): The new board will continue to run the profit center platforms unchanged while the European operations are consolidated. R&D along with product portfolios will split into RAM/Jeep/Misc in the US and everything else will come from Europe. Once Europe is consolidated so will marques with Alfa, Fiat, Opel, Peugeot, and possibly Maserati and Citroën making it although those might become badge jobs for specific markets. Chrysler as a marque is gone, Dodge will probably continue in the US only as a prole brand, Jeep and Ram are obviously safe and both will probably be expanded. Fiat as a brand will withdraw from the US and may be replaced by Peugeot but the more I think about it that’s just like what they did when they brought Fiat here (not as if VW has ever taken off, why would Peugeot?). Smart money just uses Dodge for mainline and brings Opel and/or Citroën. Whatever EV tech PSA has will come over as an Opel/Citroën first and might proliferate into the surviving Italian lux/sport marques. Eventually it will reach the Chrysler marques but I suspect that they will be left alone for at least the next three years. If it ain’t broke…

  • avatar
    ToolGuy

    highdesertcat,

    Many people consider it convenient to have wheels of their own… just an idea.

    • 0 avatar
      highdesertcat

      ToolGuy, The retired Army guy next door invited us to a “Game 7” party he and his wife were going to at some active duty Army Lt Col’s house. There were a lot of people there and we had a great time.

      So when the four of us left, the hosts hug my neighbor and his wife and the man says, “Thanks for coming Dad.” Hey, No one told us. Come to find out that was his son!

      Anyway, we have my daughter’s 2013 Odyssey to use since she drives a car issued by her employer. And she has moved in with her manfriend, which leaves her house solely for our use, since her daughter graduated college and is now employed as a mining engineer in AZ.

      So we don’t need to have wheels of our own because we travel too much right now; soon we’ll be off again to Old Mexico, and on our trips we rely on limos, livery or sometimes rentals.

      Once we settle down for good we’ll buy new cars. Beats having them sit out in the sun for weeks or months at a time when we’re gone.

      That’s what happened after we traveled overseas or out of the country starting in Jan 2016. The cars just sat out there, getting old before their time.

      We turned my wife’s 2016 Sequoia over to the business office in WY, and my #1 grandson in Fallbrook, CA, bought my 2016 Tundra. He is still making those $500/month payments, right as clockwork.

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