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Fiat Chrysler and Peugeot plan merger to create fourth largest carmaker

Image credit: reuters

Fiat Chrysler and PSA Peugeot have announced plans to merge in the hope they can achieve lower costs through higher volumes and combine forces on developing new technologies such as driverless vehicles.

The £50bn proposal has already been agreed, with Fiat Chrysler expected to particularly benefit from Peugeot’s more modern and flexible vehicle architectures.

The process of integrating platforms, powertrains and other components between the two automakers could take four years or longer, according to Sam Fiorani, head of global vehicle forecasting at AutoForecast Solutions.

The proposed combination would create the fourth largest global OEM in terms of unit sales (8.7 million vehicles), with combined revenues of nearly €170bn, the firms said.

With more efficient allocation of resources for large-scale investments in vehicle platforms, powertrain and technology, the group estimates it will save a combined €3.7bn a year. This will be without factory closures too, a concern of unions in the UK, France and Italy, where the makers have more model overlap.

Fiorani said PSA would likely get little use out of FCA’s larger truck and sport utility vehicle (SUV) platforms which underpin models such as the Jeep Wrangler and the Jeep Grand Cherokee.

Once a merger is finalised, PSA Peugeot CEO Carlos Tavares will be chief executive of the new company with Fiat Chrysler chairman John Elkann taking the role of chairman.

Fiat Chrysler CEO Mike Manley would have a senior executive role and work closely with Tavares.

“This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity,” Tavares said in a statement.

Manley called it “an industry-changing combination” and noted the long history of co-operation with Groupe PSA in the industrial vehicle sector in Europe.

Under Tavares, PSA has accelerated plans to modernise and simplify its vehicle architectures, with most of its future cars, crossovers and compact vans to be built on just two platforms.

The company’s Efficient Modular Platform, or EMP, was introduced in 2013, and eventually will underpin a wide range of vehicles under PSA’s five brands (Peugeot, Citroen, DS, Opel, Vauxhall).

A newer, smaller architecture called Common Modular Platform (CMP) was launched earlier this year and is expected to provide the base for subcompact models ranging from the Peugeot 208 to the Opel Mokka.

In 2017 Peugeot started dabbling with driverless technology, with software, sensors and computing platforms from start-up firm nuTonomy embedded into Peugeot 3008 models.

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