Monday , March 8 2021

After a long journey, Fiat Chrysler and PSA merge to become Stellantis

MILAN: Fiat Chrysler and PSA sealed their long-awaited merger on Saturday to create the Stellantis, the world’s fourth-largest car group with deep enough pockets to fund the electric drive and take on bigger rivals Toyota and Volkswagen.

It took more than a year for the Italian-American and French automakers to complete the $ 52 billion deal, during which the global economy was boosted by the COVID-19 pandemic. They first announced merger plans in October 2019, to create a group with annual sales of approximately 8.1 million vehicles.

“The merger between Peugeot SA and Fiat Chrysler Automobiles NV that will lead to the creation of Stellantis NV began today,” the two automakers said in a statement.

Shares in Stellantis, led by current PSA CEO Carlos Tavares, will start trading in Milan and Paris on Monday and in New York on Tuesday.

Analysts and investors are now turning their attention to the way Tavares intends to meet the group’s enormous challenges – from overcapacity to a miserable performance in China.

Tabars will hold his first press conference as Stella’s CEO on Tuesday after ringing the NYSE bell with President John Elkann.

The FCA and PSA have said Stellantis could cut annual costs by more than 5 billion euros ($ 6.1 billion) without shutting down, and investors will be interested in more details on how to do this.

Marcos Santino, an associate of Oliver Wyman, said he expects Tavaris to reveal the outlines of his action plan soon, but without revealing too many details at first.

“He has proven to be the kind of person who prefers action to words, so I do not think he will make strong statements or try to sell goals too much,” he said.

Like all global automakers, Stellantis will have to invest billions over the next few years to transform its electric vehicle range.

However, there are other pressing tasks, such as reviving the group’s backward assets in China, streamlining its vast world empire, and tackling its enormous excess capacity.

“It will be a step-by-step process, and it will allow the market to better appreciate every move. I do not think we will have all the details a year ago,” Santino said.

FCA CEO Mike Manley – who will lead Stellantis’ North America core business – said 40% of the automotive industry’s expected synergies would come from platform and engine convergence and optimization of R&D investment, 35% from savings in purchases and another 7% savings in sales and overheads.

(Edited by Mark Potter, Kirsten Donovan)

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