Merger between Fiat and Peugeot

Onilov Victor
Fiat Chrysler Automobiles is an Italian-American multinational corporation specialized in
automotive industry that designs, engineers, manufactures and sells some of the most nouns
cars in the world: Fiat, Alfa Romeo, Chrysler, Jeep, Maserati etc.

Peugeot is a French car automotive manufacture corporation, part of the PSA Group.
Peugeot is one of the oldest automotive manufacturer in the world since 1810. Now it is a part
of the “Peugeot Societe Anonyme” Group, a French multinational manufacturer of cars and
motorcycles. It operates with some known cars brands in the world, like: Citroen, Opel,
Peugeot, Vauxhall etc.

On 31 of October 2019, the FCA and PSA Group decided to make a merger based on a
50/50 percent of resources owned by both of the parts. The main reason for this decision was
to unite common efforts for creating a new group with a global scale. But, before taking a
decision, both part were thinking about the motives and advantages and disadvantages of this
merger. Let’s try to discover them.

1. Motives that can justify the merger between FCA and PSA Group.

Fiat and Peugeot, like all existing company in the car making field would like to be the first
company in the automotive manufacture industry in the world, but it is not so easy to get there
alone, that’s why the biggest car makings company in the world decided to merge their powers
and resources in a common group, to be able to compete in the market. I am pretty sure that
one of the main reason of the Fiat-Peugeot Merger was the reason to get more known,
stronger and to be able to compete with the biggest groups of competitors in the world, like
Renault-Nissan and Volkswagen-Toyota. The size will be one of the most important strong point
of the FCA and PSA Merger, they will sell annual around 8,7 million vehicles, from this point of
view they will be able to compete with the groups which I have mentioned above.

Another important reason for both part is the fact that they merge FCA’s strengths in the
Latin and North America’s market and PSA’s in the Europe’s market.

The plan to combine FCA’s and PSA’s businesses has also a good motivation in the
cooperation and sharing theirs growing capabilities. The most important is work together on
the electrified cars and sharing the more ecological technologies for reducing the CO2 emission.
 2. Advantages and disadvantages of this operation

Advantages of merger between Fiat and Peugeot:

 Bigger company – more efficient company and bigger opportunities

 Diversification
 Consumer perception

The most important thing for the car making companies, like I have mentioned above is to
be the first one in everything. Fiat and Peugeot combined their strengths in the different
markets, Latin and North America (FCA) and Europe PSA Group. Also an important fact is that
the merger is between 2 companies from Europe while all the others competitors like
Volkswagen and Renault are part of 2 groups with 2 companies from Japan, Nissan and Toyota,
this means that they have a good chance to surpass the Volkswagen and Renault in the future.

Another important aspect is the fact that 2 big company will share their innovative
technologies in more fields: sport cars, luxury and premium cars. Also important is the
electrified technologies for the cars and more ecological with reducing the CO2 emission.

Another thing which can be seen like an advantage and the same time disadvantage is that
the FCA and PSA Group Merger will operate in 3 big headquarters in France, Italy and USA and
also it will be listed in these countries. It is an advantage because it means a cooperation
between 3 big cultures and 2 big markets, Europe and American markets. Also is a
disadvantages because it can cause different misunderstandings and loss of control.

With one word, the biggest advantage we can call – synergy.

 Disadvantages of merger between Fiat and Peugeot:

o Cultural fit, like I have mentioned above, about the 3 different headquarters in 3
different countries, with 3 different cultures. Also ii can be harder to
communicate and coordinate.
o The common problem about the biggest market in China, where both of the
companies are not so present. “The companies have similar weaknesses,
including a reliance on a slowing European market and few sales in China, the
world’s largest new car market” The New York Times.
Sources:

https://www.theguardian.com/business/2019/oct/31/fiat-chrysler-and-psa-peugeot-agree-35bn-merger
- 06.11.2019 / 14:00

https://en.wikipedia.org/wiki/Peugeot - 06.11.2019 / 15:15

https://www.fcagroup.com - 06.11.2019 / 15:30

https://en.wikipedia.org/wiki/Groupe_PSA - 06.11.2019 / 16:50

https://www.nytimes.com/2019/10/31/business/fiat-chrysler-psa-peugeot-merger.html - 07.10.2019 /
15:00