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Fiat Chrysler Automobiles NV and Peugeot manufacturer PSA Group confirmed their trans-Atlantic merger on Saturday, creating Stellantis NV, a global automotive giant that drivers say will have the leverage to compete in a fast-changing industry.
The deal, which was only agreed in late 2019 and approved by shareholders earlier this month, comes as the global automotive company is rapidly switching to new technologies, such as electric vehicles, and the fight against startups is trying to improve everything from the way cars design and built on how they are sold.
Stellantis, derived from the Latin term meaning “to shine with stars”, is considered by the figures of 2019 to be the third largest carmaker in the world. At the end of Friday, it was worth more than $ 51 billion. The newly formed car company plans to launch on Monday at the Paris and Milan Stock Exchange under the symbol STLA and on Tuesday in New York.
| Ticker | Safety | Last | Alter | Alter% |
|---|---|---|---|---|
| FCAU | FIAT CHRYSLER AUTOMOBILES NV | 15.23 | -0.79 | -4.93% |
| STLA | after | after | after | after |
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Stellantis will be primarily in North America and more than a quarter of the market in Europe, selling vehicles through a large collection of brands, ranging from American names such as Jeep and Ram to Peugeot, Citroën and Opel in Europe and Maserati and Alfa Romeo. on the luxury side.
In a turbulent year for many global manufacturers, FCA and PSA executives have moved forward with the merger, saying the challenges of the Covid-19 pandemic have only exacerbated the need for the combination. According to them, the annual cost savings could ultimately yield $ 6 billion, in part by consolidating the engineering and purchasing parts of the two companies to promote greater economies of scale.
Yet the automotive sector has a bad record with megamergers, and many of Stellantis’ competitors, including General Motors Co., are moving in the opposite direction, pulling out of money-lost regions and downsizing their global operations to be faster.
Fiat Chrysler Automobiles NV and Peugeot manufacturer PSA Group confirmed their trans-Atlantic merger on Saturday, creating Stellantis NV, a global automotive giant. (Photo by Arne Dedert / picture alliance via Getty Images)
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Carlos Tavares, the PSA chief who is now the leading Stellantis, faces numerous challenges in bringing these two companies together, including underperforming factories, backward brands and a bad China business.
“The hardest part of any merger is when you have to mix all the cultures,” said Carla Bailo, president of the Center for Automotive Research and a former associate of Mr. Tavares at Nissan Motor Co., said.
The 62-year-old Mr. Tavares is known in the automotive circles for its success in turning shaky businesses around. When he first arrived at Peugeot from Renault in 2013, the company was thriving in cash. Within six years, it had transformed it into one of the most lucrative European car companies with PSA placing an operating margin of 8.5% in 2019. He revived Opel and Vauxhall, two once-struggling European brands that bought PSA from GM in 2017.
At PSA, the turnaround was largely achieved by withdrawing profit-damaging sales discounts and trying to keep the company vigilant about costs. He also revamped the workforce without closing factories, negotiating new union agreements and eliminating jobs by buying out.
Carlos Tavares, the PSA chief who is now the leading Stellantis, faces numerous challenges in bringing these two companies together, including underperforming factories, backward brands and a bad China business. (Marlene Awaad / Bloomberg via Getty Images)
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According to some analysts, this is a formula that he is likely to apply to Stellantis, which employs around 400,000 people worldwide.
One of the largest companies of mr. Tavares will manufacture the two automakers, which together cover nearly 50 factories worldwide, many of which operate at a lower capacity, according to data provided by research firm LMC Automotive. He also needs to boost the business in China, where the combined sales of the two companies now account for less than 1% of a market that sold 20 million vehicles last year, and correct Fiat Chrysler’s money loss operations in Europe.
On electric vehicles, Stellantis will be under pressure to match the investment being poured in by technology rivals, such as GM, which plans to spend $ 20 billion by 2025 on electric and self-driving cars.
While Fiat Chrysler and PSA have worked to expand plug-in offerings and secure battery supply, the market is becoming increasingly competitive with traditional car companies and well-funded ventures preparing to release a wave of new electric models this year.
The newly formed carmaker, called Stellantis, launches Monday in Europe and Tuesday in New York. (Jeep)
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Stellantis plans to divert most of its projected $ 6 billion annual savings to the development of electric vehicles and other expensive technologies. But first, it must tackle areas of overlap in manufacturing and vehicle setups, without closing factories and eliminating brands as drivers promised, a task that industry analysts say could be difficult as automakers continue to depress sales during the pandemic facing.
Me. Bailo says Mr. Tavares, an auto fanatic who spends many weekends in race cars, will likely take time to review the business and get to know his peers at Fiat Chrysler before making major changes.
“He’s not the kind of leader who gives you a target and says, ‘Go find a way to achieve that,'” she said. “He is much more practical than the typical leader.”