Italian-American carmaker Fiat Chrysler Automobiles on Wednesday confirmed that it is in talks with French rival PSA Peugeot, its second bid this year to reshape the global auto industry which is facing huge challenges with the transition to electric and autonomous vehicles.
The statement said the discussions were ongoing “aimed at creating one of the world’s leading mobility groups,” but didn’t specify whether the goal was a full merger or a looser alliance. No further details were given. PSA Peugeot put out a similar statement.
FCA shares shot up nearly 9 per cent on the news to 12.75 euros ($14.70 US) in Milan trading.
Fiat Chrysler has long been looking for a partner to help shoulder investments in the capital-heavy industry, under the outlook that failure to consolidate would inevitably lead some companies to fail.
Talks this year with another French carmaker, Renault, to create what would have been the third-largest carmaker broke down over French government concerns about the role of the Japanese partner Nissan and criticisms from Renault’s leading union.
Like Renault, PSA is partly owned by the French government, which will put a priority on protecting jobs in French plants.
Peugeot family group, China’s Dongfeng Motors, and French state investment bank BPI France each have 12.23 per cent of capital and 19.5 per cent voting rights.
PSA now Europe’s No. 2 automaker after bailout
Fiat Chrysler Automobiles was formed in 2014 out of a merger of Italian carmaker Fiat and the American company Chrysler, which Fiat brought back from the brink of bankruptcy. It is controlled by the Fiat-founding Agnelli family, represented in FCA by chairman John Elkann who spearheaded the Renault talks. His role in these talks has not been disclosed.
Fiat Chrysler has a larger global footprint that PSA Peugeot, whose focus is on Europe where it is the second-largest carmaker. Fiat Chrysler last year sold 5.8 million cars globally but it makes the lion’s share of its profits in the United States and has been struggling in Asia and Europe. PSA sold 3.9 million cars last year.
Fiat Chrysler is making a concerted push into electric and hybrid vehicles, where it has lagged, focusing in particular on its premium brands Alfa Romeo and Maserati.
PSA has performed a remarkable turnaround in recent years, going from one of the industry’s sicker car companies to one of its more powerful. That’s notably thanks to an unusual $4.1 billion bailout in 2014 in which Dongfeng and the French state gained equal shares to the family that founded Peugeot 200 years ago.
In 2017, PSA bought General Motors’ Opel and Vauxhall brands for $2.33 billion, making it Europe’s No. 2 automaker after Volkswagen.
PSA is now planning to reintroduce Peugeot cars to North American markets as part of a plan that includes a car sharing service introduced in Washington last year.