Fiat Chrysler and PSA Flirting With a Merging?

Tim Healey
by Tim Healey
fiat chrysler and psa flirting with a merging

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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  • 28-Cars-Later 28-Cars-Later on Oct 30, 2019

    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...

    • Highdesertcat Highdesertcat on Oct 30, 2019

      Agreed! Wish I could stay and follow the thread, but I gotta go. My ride is here. Won’t be back ‘til late.

  • ToolGuy ToolGuy on Oct 30, 2019

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

    • Highdesertcat Highdesertcat on Oct 31, 2019

      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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