After an extended journey, Fiat Chrysler and PSA merge to change into Stellantis
© Reuters. FILE PHOTO: The Stellantis logo
By Giulio Piovaccari
MILAN (Reuters) – Fiat Chrysler and PSA on Saturday sealed their long-awaited merger to create Stellantis, the world's fourth largest auto group with deep enough pockets to fund the move to electric driving and bigger rivals like Toyota and Volkswagen (DE :).
It took Italian-American and French automakers over a year to finalize the $ 52 billion deal that rocked the global economy by the COVID-19 pandemic. They first announced plans to merge in October 2019 to create a group with annual sales of around 8.1 million vehicles.
"The merger between Peugeot (OTC 🙂 S.A. and Fiat Chrysler Automobiles N.V., which will pave the way for the creation of Stellantis N.V., took effect today," the two automakers said in a statement.
Stellantis shares, led by current PSA boss Carlos Tavares, will trade in Milan and Paris on Monday and New York on Tuesday.
Now analysts and investors are focused on how Tavares plans to address the group's huge challenges – from overcapacity to a sad performance in China.
Tavares will hold his first press conference as CEO of Stellantis on Tuesday after ringing the NYSE with Chairman John Elkann.
According to the FCA and PSA, Stellantis can cut annual costs by over $ 5 billion without plant closings, and investors will be craving for more details.
Marco Santino, partner at Consultants Oliver Wyman, said he expected Tavares to soon reveal the outline of its action plan, but without revealing too many details first.
"He's proven to be the kind of person who prefers action over words. I don't think he's going to make loud statements or try to outbid goals," he said.
Like all global automakers, Stellantis will have to invest billions in the coming years to transform its range of vehicles for the electric age.
But other pressing tasks lie ahead, including revitalizing the group's sluggish wealth in China, rationalizing its vast global empire, and eliminating massive overcapacity.
"It will be a step-by-step process so that the market can better assess every single step. I don't think we'll have all the details a year ago," said Santino.
Mike Manley, CEO of FCA, who will lead Stellantis’s key North American operations, said 40% of the automaker’s expected synergies would come from converging platforms and powertrains and optimizing R&D investments, 35% off Savings on purchases and an additional 7% from savings on sales and general costs.
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