Fiat Chrysler and PSA group discuss possible merger

The French PSA group owner of Peugeot, Citroën, DS, Opel and Vauxhall, interested in merging with Fiat Chrysler.

Talk about a monopoly, if a deal were to happen between the two carmakers the combined market value would exceed £39bn.

Fiat Chrysler previously attempted a merger with Renault this year in June, however this did not go ahead due to issues between Renault and their Japanese partner Nissan.

However, this certainly has uplifted traders confidence in the brand with stocks jumping 9% on Wednesday.

The potential merger is certainly not clear cut though as it entertains two giants of industry, therefore would require both political and financial institutions to have their say.

If the companies merger goes ahead then The PSA CEO Carlos Tavares is expected to head the company ongoing.

In the coming years we are likely to see many more mergers taking place due to the high investment required by manufacturers to meet reducing emissions targets and autonomous vehicles.

Morningstar senior equity analyst Richard Hilgert said that the total sales of Fiat Chrysler and Peugeot, including China joint venture partners, were 8.7 million vehicles last year.

This would rank the eventual combined group fourth behind Volkswagen, Toyota and the Renault-Nissan Alliance, each at more than 10 million units.

“We view the combination of these two companies as reasonable given global competition, high capital intensity, and industry disruption from electrified powertrain as well as autonomous technologies, Mr Hilgert said.

Fiat Chrysler had described its bid for Renault as a “transformative” proposal that would create a global automotive leader.

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