MILAN (Reuters) – Fiat Chrysler and PSA will conclude their long-awaited merger on Saturday to create Stellantis, the world’s fourth largest car group with deep enough pockets to fund the shift to electric management and tackle bigger rivals Toyota and Volkswagen.
It took more than a year before Italian-American and French carmakers finalized the $ 52 billion deal during which the COVID-19 pandemic boosted the world economy. They only announced plans in October 2019 to merge to create a group with annual sales of approximately 8.1 million vehicles.
Shares in Stellantis, led by current PSA chief executive Carlos Tavares, begin Monday in Milan and Paris and Tuesday in New York.
Now analysts and investors are focusing on how Tavares intends to tackle the major challenges facing the group – from excessive production capacity to an unfortunate performance in China.
Tavares is holding its first press conference as CEO of Stellantis on Tuesday, after calling NYK’s chairman of NYSE.
FCA and PSA said Stellantis could cut annual costs by more than 5 billion euros ($ 6.1 billion) without building the plant, and investors would like more information on how it will do so.
Marco Santino, a partner at consultants Oliver Wyman, said he expects Tavares to reveal the details of his action plan soon, but without revealing too many details at first.
“He has proven that he is the kind of person who prefers to act above words, so I do not think he will make loud statements or try to sell targets,” he said.
Like all global automakers, Stellantis will have to invest billions in the coming years to convert its vehicle range to the electric era.
But other urgent tasks lie ahead, including repairing the group’s backlog in China, rationalizing its vast world empire and addressing large overcapacity.
‘It will be a step-by-step process, to make the market better appreciate every move. “I do not think we will have all the details before one year,” said Santino.
Mike Manley, CEO of FCA, which heads major operations in North America at Stellantis, said 40% of the automaker’s expected synergies would result from the confluence of platforms and drivers and the optimization of R&D investments, 35% from savings on purchases and another 7% from savings on sales operations and general expenses.
($ 1 = 0.8226 euros)
Reporting by Giulio Piovaccari. Edited by Mark Potter