The agreement between PSA and FCA will give rise to a new giant in the automotive industry

It is official: the automotive groups FCA and PSA have signed a new alliance that will create what will be the fourth largest car manufacturer in the world by volume

The official confirmation of the union between FCA, Fiat-Chrysler Automobiles, and the other group, Groupe PSA, Peugeot-Citroën, is a fact. Yesterday, both groups issued a joint statement announcing the creation of a new group of global size and resources, owned 50 percent by PSA shareholders and 50 percent by FCA shareholders”.

This means the creation of a new consortium, the fourth most important in the automotive industry that encompasses all 14 car manufacturers currently held separately by the two groups, under a single umbrella.

On one side, the agreement between FCA and PSA involves the Italian-American brands Fiat, Alfa Romeo, Lancia, Fiat Professional, Abarth, Maserati, Ferrari, Jeep, Chrysler and Dodge and, on the other, the Franco-German brands Peugeot, Citroën, DS, Opel/Vauxhall, not to mention other market niches offered by Mopar, FCA Bank, PSA Financial Services and Opel Finance.

The value of the new automotive group will exceed approximately 45,454 million euros, and an annual sales volume of around 8.7 million vehicles is estimated, which will push the consortium up to fourth place in importance among vehicle manufacturers, behind the Toyota Group (10.56 million produced), the so-called Alliance (Renault-Nissan-Mitsubishi, with 10.76 million) and the Volkswagen Group (10.8), and ahead of General Motors (7.94) and the Hyundai-Kia combination (7.39).

The leadership of this new global consortium will include the current FCA chairman, John Elkann, as chairman of the new group, and Carlos Tavares, current PSA chairman, as chief executive of the automotive giant.

In this agreement, the figure of the French government has been present since, by holding more than 12 percent of the shares of Groupe PSA, it has been able to tip the balance for or against, as already happened last May with the failed attempt to merge the also French Renault with FCA.

On the other hand, the statement assures that this merger between PSA and FCA will allow synergies of 3.7 billion to be achieved while keeping all production plants active as before the agreement was signed.

The announcement of this agreement between FCA and PSA has had an immediate impact, as seen in the rise in the stock market value of the respective groups. Thus, the shares of the groups increased their quotation by 9.53% on the Milan stock exchange for the Italian-American group, and by 4.53 percent for the Franco-German group on the Paris exchange, respectively.