Fiat-PSA merger: a project soon to be approved by the European Commission

  •   27/10/2020 - 07h41
  •   DEHOUI Lionel

In order to meet the twofold challenge currently facing the automotive industry, Fiat Chrysler and PSA have decided to join forces through a merger. Indeed, recent information about this alliance refers to the date of approval by the European Commission. The institution's verdict could be unveiled before the end of the year.

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Fiat-PSA merger: a project soon to be approved by the European Commission
Image copyright: Ming-yen Hsu - Flickr

The aim of this merger project

The main objective of the planned merger between Fiat Chrysler and PSA is the creation of the world's fourth largest car manufacturer. The new entity formed by the two carmakers will be named " Stellantis ". The creation of this new manufacturer will meet the current requirements of the automotive industry.

In reality, the current challenge for the automotive industry is the financing of clean cars. It is also relative to the decline in demand due to the Covid-19 pandemic. Thus, the merger of the two companies will help to boost this sector by meeting these many challenges. Also, it should be stressed that the alliance between Fiat Chrysler and PSA is entirely made up of shares.

 

Proposed concessions in the field of commercial vehicles

The merger of the two car manufacturers has raised quite a few concerns at the level of the European Commission. It was therefore necessary for them to find solutions that would remove these various concerns. Thus, in order to respond to the institution's concerns about their marriage, the two companies opted for a proposal of concessions.

Indeed, according to sources close to the file, PSA had made a proposal in September, relating to the reinforcement of Toyota on the segment of utility vehicles. Fiat Chrysler and PSA will also grant their dealers an authorisation allowing them to operate in certain cities. This authorisation will concern the repair of vehicles of competing makes.

In addition, the health crisis linked to the coronavirus pandemic has forced Fiat and PSA to review the terms of their alliance. Indeed, the two car manufacturers had to make amendments to their merger project last month. This will enable them to strengthen their balance sheet in the face of this crisis.

Also, the two groups will be able to maintain the balances established before the epidemic crisis. It should be remembered that the two automotive giants had unveiled their merger project in December 2019.

 

The European Commission will soon give its verdict in this case

Although the decision of the European Commission on the merger of Fiat Chrysler and PSA is expected to be announced soon, it is still important to know exactly when the institution will give its approval in this matter. Still, according to sources close to the case, this decision could come before the end of the year.

For more information on the subject, the Agefi-Dow Jones agency has contacted people close to the case, including representatives of the European Commission in this affair and spokespersons for the two car manufacturers. However, the latter have chosen not to comment on the subject.

It should be recalled that the merger between Fiat Chrysler and PSA was the subject of an in-depth investigation by Brussels in June. The two car manufacturers had made a presentation of concessions at the end of September. This was done in the context of obtaining the endorsement of Brussels.