PSA and FCA merger to keep all 14 car brands – report

With a total of 14 brands between them, the merger between the PSA Group and Fiat Chrysler Automobiles (FCA) is sure to be complicated, and you’d expect a few clashing nameplates to end up on the cutting room floor. But Reuters reports that the combined entity is likely to keep every single one of them, and that’s according to the man soon to be tasked with untangling that intricate web of brands, Carlos Tavares.

The current chief executive officer of PSA is expected to assume that role for the entire operation once the US$50 billion (RM207.5 billion) tie-up is completed. In an interview with France’s BFM Business – his first since the two conglomerates agreed to merge last month – the Portuguese executive said that the five PSA and nine FCA brands aren’t going anywhere anytime soon.

“As of today, I don’t see any need to scrap any of the brands if the deal came to pass. They all have their history and their strengths,” Tavares said. The combined portfolio, which would create the world’s fourth-largest carmaker and include Peugeot, Citroën, Opel, Alfa Romeo, Maserati and Jeep, eclipses the 10 brands of number one Volkswagen, even counting the latter’s newer Chinese brands such as Sol.

Tavares added that the two complement each other well in terms of technologies, brands and geographical spread. “There’s no doubt it’s a very good deal for both parties. It’s a win-win,” he said. Data from Refinitiv’s Eikon financial analysis showed FCA derives 66% of its revenue from North America, compared to only 5.7% for PSA – a company that holds no real presence there and still trades primarily in Europe.

The 50:50 share merger, which would help FCA “seize great opportunities” according to its chairman and would-be chair of the entire group John Elkann, is still in its early stages. While the two companies aim to reach a binding outline in the coming weeks, they still face questions over potential job losses and whether the deal favours one party more than the other.

The group will have a combined workforce of around 400,000, and both the French and Italian governments as well as workers’ unions are analysing the implications of the deal. On his part, Tavares said that the companies can save billions of euros annually without closing factories, but he would not rule out job cuts, only saying, “That’s the car industry, it’s not about PSA.”

He added that stricter regulations on everything from safety to pollution are putting pressure on profits, and the carmakers have to find some way to stay in the black. “Margins are continually under pressure and you have to permanently be looking for productivity gains,” he said.

The merger also hinges on approval from anti-trust authorities, and while Tavares said he did not expect to have to make major concessions to meet competition rules, both PSA and FCA are ready to do so, although he declined to elaborate any further.

So it will probably be a long time before the merger actually gets the green light, as Elkann has previously hinted, and those comments were repeated by Tavares. “Given all the necessary regulatory approvals that need to be granted, such a deal cannot be closed in less than a year,” he said.

He, however, remains positive. While Tavares did mention that the companies were still being prudent – and that he has seen deals being called off when parties got into the details – he said the talks between PSA and FCA were evolving favourably.

In a joint press release, the carmakers said that the combined entity will be able to leverage its strong global R&D footprint and ecosystem to foster innovation and meet the new challenges in connected, electrified, shared and autonomous mobility with better speed and capital efficiency.

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