By on November 26, 2019

Undaunted by General Motors’ racketeering lawsuit, Fiat Chrysler and partner Groupe PSA have told employees that the tentative $50 billion merger they agreed on last month will kick off in earnest in a matter of weeks.

The two automakers imply a binding agreement will be signed before year’s end — right on schedule.

The message to FCA and PSA employees, intercepted by Reuters, came through two internal channels, with those workers being told a team of 50 people were working on the tie-up. Under the proposed merger, the new entity would be headquartered in the Netherlands, with PSA’s Carlos Tavares serving as CEO and FCA’s John Elkann as chairman.

No brands at either automaker would be on the chopping block, Tavares claims.

In creating the world’s fourth-largest automaker, both companies would be able to take advantage of the other’s technological know-how, as well as their presence in regions where the other might like to make inroads. For PSA, Fiat Chrysler’s North American dealer network might help ease its re-entry into that market. For FCA, its partner’s overseas presence and electrification tech could come in handy — not to mention its small car platforms.

Money saved through efficiencies is targeted at $4.1 billion a year.

According to the message sent to employees, nine working groups have been created to help make the merger a reality. Heading up these teams are David Ostermann, FCA’s group treasurer and head of business development, as well as Olivier Bourges, PSA’s executive vice president for program and strategy.

Much has been said about the potential risks to the merger posed by GM’s lawsuit, which accuses FCA of bribing UAW officials in order to corrupt the collective bargaining process and draw favorable concessions from the union. How this might impact the merger really depends on the strength of GM’s evidence and its ability to prove its claims in court. Meanwhile, the proposed merger seems to be speeding towards an agreement.

Aside from refuting GM’s claims (and claiming the suit represents an attempt to scuttle the merger), FCA hasn’t said much about it. PSA chose the “no comment” route.

[Image: Matthew Guy/TTAC]

Get the latest TTAC e-Newsletter!

13 Comments on “FCA, PSA to Employees: Merger Deal Is Just Weeks Away...”

  • avatar

    This deal will give the French 1/3 of the US auto industry and drop GM to fifth place in international sales. I knew the Japanese, Germans, and Koreans would surpass the US auto industry, but I never figured the French would surpass the US as well. When Mary Barra sold Opel to PSA she never thought they would come to America and surpass GM in world market share. Barra does not practice long term planning. Suing FCA will not stop this from happening now.

  • avatar

    If this means I can get a ds. I’m OK with it.

    Or maybe that new 508

  • avatar

    One consolation to US workers now negotiating their contract, is that everything FCA makes in the US, except for the non-grand Cherokee, is so large they are irrelevant in the rest of the world, so no worries about US production being replaced by rebadged Pugs built elsewhere. As for the non-grand Cherokee, it is safe as well as, while the Pug 5008 is the same size, the Pug is front drive only, making it a no-go as a replacement for anything Jeep.

    It will be interesting to see if any language is put in the merger agreement to protect PSA investors from a potential multibillion dollar judgement from the GM suit. I agree with a log of people that the GM suit is nothing but a gambit by GM to sabotage the merger, so GM does not have an even stronger competitor, but the risk of a finding in GM’s favor should still be accounted for.

  • avatar
    SCE to AUX

    “For PSA, Fiat Chrysler’s North American dealer network might help ease its re-entry into that market.”

    Yeah, that won’t work.

    • 0 avatar
      Guitar man

      It automatically happens once the merger occurs.

      There’s no detail on how they are going to deal with the two US security law issues – viz the ownership by DongFeng and the French government, which are both prohibited under US law.

      They might be able to work around the government issue – after all both MB and Fiat had levels of state ownership, but DongFeng ?

      Its not just a question of selling, few companies have that level of cash just lying around certainly not PSA or FCA. It would have to be an equity swap, they’d have to slice off some part of FCA/PSA to DongFeng.

  • avatar

    General comment: It seems like *someone* knows how to get things done.

  • avatar

    A part of me really questions the wisdom of these mega mergers which seem designed to mask fundamental problems rather than address them. Far more impressive to me are the likes of Ford and Honda who stand alone with basically just one or two brands. Consider for example the relative success of an industry minnow like JLR. Sure they’ve had tough times but confront their challenges head on. Consider how a small company like JLR has beaten bigger players to market with an electric car, has expanded their range of products hugely in the past decade and has invested in new factories and plant while still more often than not turning a buck.

    For sure JLR and others like them may need partners to thrive but they achieve a lot with little. I think there is a lesson there for big car makers to learn from.

    • 0 avatar

      I thought they were brand under Ford and then Tata ownership. When they become independent? I missed that moment. And of course it was not Ford’s money that developed new JLR models, because JLR is so profitable that they have no problem developing new platforms including one for BEV.

  • avatar

    For the first time in nearly a century, FCA(Chrysler) will be larger then GM. It looks as if history will be made soon.

    GM – what a disgrace!

    • 0 avatar

      GM market share will continue to decline to 10-12% and probably hold there. They do not care, they are slowly transitioning to becoming a P.R. China corporation with a US presence. Figure it might take them ten years to slim down US operations and they may keep some plants/offices.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • speedlaw: Without knowing the actual terms of the deal this is just a press release. 1. Don’t be gentle,...
  • ajla: My Stinger has had 4 issues in 3 years (brakes twice, paint problem, wheel sensor). All were fixed under...
  • dusterdude: Horrible car. Back in 86 my then girlfriends sister bought one , and it didn’t hold up at all. ( very...
  • Jeff S: A really innovative car for its time. Very good article. Thanks Corey for another interesting well written...
  • Jeff S: My older brother bought a new Fiat 124 sedan in 1978 and it was a great handling car and not too bad...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber