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Fiat Chrysler in Merger Talks With PSA, Maker of Peugeot Fiat Chrysler in Merger Talks With PSA, Maker of Peugeot
(about 2 hours later)
Fiat Chrysler said Wednesday it is in talks with the French maker of Peugeot and Citroën cars about a possible merger, the latest example of how automakers are joining forces to survive major technological shifts in the industry. Fiat Chrysler and the PSA Group, the French maker of Peugeot and Citroën cars, said Wednesday they were in talks about a possible merger, the latest example of how automakers are joining forces to survive major technological shifts in the industry.
Fiat Chrysler said in a statement that it is in talks with PSA Group “on a possible business combination.” Fiat Chrysler said in a statement that it was having discussions with PSA Group “on a possible business combination.”
In its own statement on Wednesday, PSA Group, citing media reports about a potential deal between the two companies, said it “confirms there are ongoing discussions aiming at creating one of the world‘s leading automotive groups.”In its own statement on Wednesday, PSA Group, citing media reports about a potential deal between the two companies, said it “confirms there are ongoing discussions aiming at creating one of the world‘s leading automotive groups.”
Shares in both companies jumped in response, with Fiat Chrysler rising more than 7 percent, and PSA nearly 9 percent.Shares in both companies jumped in response, with Fiat Chrysler rising more than 7 percent, and PSA nearly 9 percent.
If successful, the merger would give PSA access to the United States market for the first time in decades, and give Fiat Chrysler a partner to share the costs of developing new cars. A merger would create the world’s fourth largest carmaker, after Toyota, the Renault-Nissan-Mitsubishi alliance and Volkswagen. Earlier this year competitive pressures pushed Fiat Chrysler to explore a deal with Renault, another French automaker, before talks fell apart.
It could also give PSA access to the United States market for the first time in decades, and provide Fiat Chrysler a partner to share the costs of developing new cars.
That is especially crucial now that the auto industry is moving toward battery-powered vehicles and autonomous driving technology. Smaller companies like PSA and Fiat Chrysler may lack the size to manage the enormous costs of this transition.That is especially crucial now that the auto industry is moving toward battery-powered vehicles and autonomous driving technology. Smaller companies like PSA and Fiat Chrysler may lack the size to manage the enormous costs of this transition.
Further intensifying the competitive landscape, powerful technology companies with considerable war chests, like Google, have expressed interest in the automotive market. Ride-sharing companies like Uber and Lyft have raised questions about whether many people need to buy their own cars, putting pressure on automakers to adjust assumptions that have guided their business decisions for decades. Further intensifying the competitive landscape are powerful technology companies with considerable war chests, like Google, which have expressed interest in the automotive market. Ride-sharing companies like Uber and Lyft have raised questions about whether many people need to buy their own cars, putting pressure on automakers to adjust assumptions that have guided their business decisions for decades.
Such competitive pressures pushed Fiat Chrysler to explore a deal with Renault, another French automaker, earlier this year. A combined company would still face tough challenges on a number of fronts. In China, the world’s largest market for new cars, it would still trail rivals like Volkswagen, General Motors and major Japanese automakers. Fiat Chrysler has a minimal presence there.
Political issues scuttled that deal, and could prove to be a stumbling block in completing any transaction between Fiat Chrysler and PSA. The French government has a stake in PSA giving it 19 percent of the company’s voting rights. PSA has a joint venture with a Chinese automaker, Dongfeng Motor Group, but it has struggled to gain market share against other foreign brands in China. Making up that ground could get even tougher as sales fall in the once vibrant market because of slowing economic growth and cuts in government subsidies for car buyers.
In June, political issues scuttled the merger talks between Fiat Chrysler and Renault, and could prove to be a stumbling block in any deal between Fiat Chrysler and PSA. The French government has a stake in PSA giving it 19 percent of the company’s voting rights.