Fiat Chrysler, Peugeot in talks to establish $50bn car giant

Fiat is back seeking a French partner just months after a tie-up with Renault fell through

US-Italian auto giant Fiat Chrysler and France's Groupe PSA, the maker of Peugeot and Citroen cars, announced Wednesday they are in merger talks that could create the world's number four automaker. Fiat Chrysler Automobiles (FCA) said in a statement it "confirms there are ongoing discussions aimed at creating one of the world's leading mobility groups" with PSA. The statement and a similar one from PSA however offered no additional details.

A person with knowledge of the matter told AFP on Tuesday that the merger would yield an entity valued at about $50bn. Media's source also said Carlos Tavares, the chief executive of Peugeot's parent, Groupe PSA, would lead the new company as CEO while John Elkann, chairman of FCA, would be chairman. Discussions between the automakers are ongoing and there is no guarantee of an agreement, he added, confirming details first published in the Wall Street Journal.

What is so far clear is however that a merger of the two groups would bring under one roof Alfa Romeo, Chrysler, Citroen, Dodge, DS, Jeep, Lancia, Maserati, Opel, Peugeot and Vauxhall.

Despite its Italian origins with Fiat, FCA does not have a very strong position in Europe compared to PSA with its French and German brands. On the other hand, PSA is absent from the massive US market, where FCA has Chrysler plus the Jeep, Dodge and Ram brands.

"Both FCA and PSA need an alliance," Marco Bentivogli, head of the Italian trade union Fim-Cisl, said late on Tuesday when rumours of merger talks first began to circulate.

"This is not the first time Elkann and Tavares have spoken," he added.

PSA posted a new record for revenues of 74bn euros ($82bn) in 2018 while FCA reported 110bn euros in revenue. The French group has a market capitalisation of 22.54bn euros on the Paris Stock Exchange, while FCA is valued at just over $28bn on Wall Street and 20.74bn euros in Milan.

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