FCA and PSA ‘discuss merger’: report

AFTER getting the cold shoulder from the Renault-Nissan-Mitsubishi Alliance earlier this year, Fiat Chrysler Automobiles (FCA) reportedly is having fresh thoughts about cuddling up with another potential French marriage partner, PSA Group.

The Wall Street Journal reports that PSA’s board is planning hold an extraordinary meeting this week to discuss a potential merger with the Italian-American company, which is seeking a partner to share vehicle development costs, particularly those of electric and autonomous vehicles.

Neither company has officially commented on the report, but neither have they denied the speculation.

A merger between the two groups would create a global motor manufacturer with an annual production of about 8.72 million vehicles, which would position them closer to industry leaders Volkswagen Group (10.83 million), Renault-Nissan-Mitsubishi (10.76m) and Toyota Motor Corporation (10.59m).

PSA, whose main brands include Peugeot, Citroen, DS, Opel and Vauxhall, reportedly flirted with FCA about an alliance earlier this year, but FCA preferred to try to woo rival Renault-Nissan-Mitsubishi.

However, Renault rebuffed the FCA approach, and an FCA-PSA link now appears to be back on the table.

For PSA, a merger with FCA would help ease it into the North American market – a glaring hole in the PSA portfolio. PSA already has plans for its US rollout in 2023.

Among the major shareholders of PSA are the French government, China’s Dongfeng Motors and the Peugeot family, all of which would have to tick the box if any “merger of equals” were to go ahead.

The French government is also a major shareholder of Renault and was seen to be the main stumbling block to the FCA-Renault tie-up that, after early enthusiasm, suddenly fell apart in May.

PSA has been transformed under former Renault executive Carlos Tavares since it nearly went broke in 2013.

Not only are the core French bands now profitable, but PSA has also worked wonders at Opel and Vauxhall, which it bought from General Motors in 2017 for $US2.3 billion ($A3.35b).

Several news outlets suggest that if a full merger of PSA and FCA went ahead, Mr Tavares would become global CEO, rather than FCA’s Mike Manley.