The car industry is developing for more than a century. Numerous carmakers tried to become the dominant force on the market. However, in the modern world, it is tough to be among the leaders of the car industry. There are numerous carmakers around the world. It means that competition among the automakers is fierce and this tendency will continue in the future.
In this situation, companies are trying to minimize the costs and to implement changes that will help them to optimize their business activities. It is not surprising that companies also consider merging with their competitors, as this will make it easier to deal with problems.
It is worth mentioning that due to strict regulations as well as global economic problems it is getting harder and harder to survive in this business. At a time when auto sales are falling, it is important to create a plan on how to keep up with the latest trends in the car industry.
On Thursday, Fiat Chrysler Automobiles and PSA Group made an announcement that will affect the global car industry. According to this announcement, they reached an agreement to join the forces. It means that as a result of this deal they would create the world’s third-largest automaker.
This decision will make it easier to compete with other carmakers. It is not the first time neither for Fiat Chrysler nor for PSA Group, as both of them already have an experience when it comes to mergers.
The details of this deal
As mentioned above, due to the fierce competition and new tendencies companies are trying to cut the costs as much as possible. The Fiat Chrysler and PSA Group decide to reduce the costs by creating a joint company.
According to the agreement, shareholders of each automaker would own 50% of the combined operation. On Thursday, companies released a joint statement regarding the upcoming deal. Fiat Chrysler and PSA The group stated they would finalize the details within weeks.
The headquarters of the combined company will be in the Netherlands. At the moment, Fiat Chrysler’s headquarters are located in this country. It means that after the agreement, new management will be based in this European country.
Another interesting fact is that John Elkann would become the chairman of the combined company. The current CEO of PSA Group Carlos Tavares would serve in the same capacity in the newly formed company.
As a result of this deal, the number of employees in the combined company would be around 410,000 employees. Also, the annual revenue will reach $190 billion.
In terms of cars sold worldwide, this company will become one of the largest after Toyota and Volkswagen. Each of them sold more than $10 million vehicles in 2018.
PSA Group, which manufactures cars such as Peugeot, Citroen, and others usefully acquired Opel and Vauxhall from GM. Thanks to PSA Group, Opel and Vauxhall started to earn money. This fact shows that PSA can help Fiat Chrysler to become more successful in this industry. Several years ago Fiat also rescued Chrysler after it went bankrupt as a result of the global financial crisis. This example shows that Fiat has the experience to deal with current challenges.