Groupe PSA, Europe’s second-largest automaker, and FCA, the Italian-American conglomerate that is currently the world's eighth largest automaker, have announced plans to join forces. If the merger materialises, the new entity will be the fourth largest automobile manufacturer in the world.

Aimed at consolidating the two companies’ global Research and Development footprint to optimise efficiency while embracing sustainable mobility. While the official communication that says global scale and resources will be owned 50 per cent by Groupe PSA shareholders and 50 per cent by FCA shareholders, analysts are of the opinion the dynamics of the merger could be more complicated than the perfect 50:50 deal that is being projected. Indeed, with quite a few stakeholders including French and Italian governments and the Agnelli and Peugeot families, going forward with the deal is sure to be a complex matter, and as experts point out, could leave PSA shareholders shortchanged. However, if the top management at both the firms and the shareholders manage to address apprehensions and make it work, this will be one of the biggest developments in the automobile world for some time now.

Apart from leveraging FCA’s strength in North America and Latin America and Groupe PSA’s in Europe, the combination would unite the groups’ respective brand strengths across segments, and bring together capabilities in sustainable mobility, including electrified powertrain, autonomous driving and digital connectivity.

The proposed merger would boast unit sales of 8.7 million vehicles and combined revenues of nearly 170 billion euros and recurring operating profit of over 11 billion euros. The new entity will come under a Dutch parent company and the governance structure of the new company would be balanced between the contributing shareholders, with the majority of the directors being independent. The Board would comprise 11 members, out of which five would be nominated by FCA (including John Elkann as Chairman) and five would be nominated by Groupe PSA (including the Senior Independent Director and the Vice Chairman). The Chief Executive Officer for an initial term of five years would be Carlos Tavares, the current CEO of Groupe PSA.  “This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity. I’m pleased with the work already done with Mike [FCA CEO Michael Manley] and will be very happy to work with him to build a great company together,” said Carlos Tavares.

"I'm delighted by the opportunity to work with Carlos and his team on this potentially industry-changing combination,” said Mike Manley. “We have a long history of successful cooperation with Groupe PSA and I am convinced that together with our great people we can create a world class global mobility company,” he added.