Fiat Chrysler Allegedly Rejects PSA’s Merger Advances

After the PSA Group approached Fiat Chrysler Automobiles this year with regards to a possible merger, the Italian-American automaker rejected the offer, as per the Wall Street Journal, citing sources familiar with the matter.

According to the report, executives at the two companies are no longer talking about teaming up, with FCA being against the idea of increasing its exposure to Europe’s mature market, while the Agnelli family, which holds a controlling stake in the company, doesn’t want a transaction financed with PSA stock.

This means that a successful PSA offer would probably have to use equity in order to keep debt under control, seen as how the automaker has yet to fully process its acquisition of GM’s European business, reports Autonews Europe.

Still, FCA CEO Mike Manley told reporters in Geneva this month that he’s not opposed to a deal that would make his company stronger.

“I want to find areas where cooperation – whether it is partnerships, whether it’s joint ventures or whether it is deeper levels of equity cooperation that makes sense for us and whoever that is – [will] give better vehicles to our customers and a better return to our shareholders.”

Meanwhile, Richard Hilgert, a senior equity analyst at Morningstar, said that from a volume perspective, it would make sense for FCA and PSA to combine forces, as together they would produce nearly 9 million cars per year, giving them the power to compete with the VW Group, Toyota and the Renault-Nissan-Mitsubishi alliance.

A merger could also help PSA’s Peugeot brand to work alongside an “established set of dealers” once they return to North America, added Hilgert.

  • FlamerSmasherMBXCar_Part II

    Good FCA will do nothing more than just ruin the return of PSA products to the U.S..

  • Stephen G

    It was PSA (not FCA) that purchased GM’s European business. What the F is your editor doing?

    • Liam Paul

      Where did carscopp say it was FCA?

      • Stephen G

        It was in the 3rd paragraph.

  • designer_dick

    The only thing PSA would get out of a merger with FCA is access to the US market, which really isn’t enough for them to warrant taking on the mess that FCA finds itself in. Yes, the company is currently profitable, but how long can that continue? If the market turns against SUVs and pickups, FCA will fold like a house of cards, as both its American and Italian car lines are becoming increasingly outdated (up to 11/12 years old in some instances), with no replacements on the horizon.

    By contrast, the oldest car in PSA’s mainstream range, the Opel/Vauxhall Corsa (coincidentally related to the Fiat 500L, 500X, Tipo and Jeep Renegade/Compass) is not long for this world, soon to be replaced by a new model based on PSA’s brand new CMP architecture.

    • Stephen G

      Lotta truth to that. However the Jeep and Ram arms of FCA are profitable and I’m sure there are allot of manufacturers that would love to get their hands on Jeep. Do you really feel the market will turn on trucks and SUV’s? I know people are deeply in debt in trucks but unless the American economy takes a serious long term down turn (like the last Republican (Bush/Cheney) Depression, people will not give up on trucks.

      • designer_dick

        There’s a reason GM and Ford have both decided to get back into the mid-sized truck business and expand their car-based crossover lineups over the past few years, to cover as many bases as possible while still giving buyers what they seem to want. FCA has failed to follow suit, with no mid-sized RAM, and only Fiat’s rather sparse lineup combined with Jeep’s smaller, Italian-derived products providing any potential ray of light in the event of an economic downturn or sudden rise in fuel costs.

        • Stephen G

          There is also a reason they all got out of the mid-size market. Mid size trucks sell for American manufacturers until the economy tanks and big discounts are available on full size trucks. Jeep has SUV’s covered. Also, if your manufacturing facilities are at capacity it is not necessary to expand and compete in every market.

    • helloWorld

      as long as they sell within projections, doesn’t matter if the platform is 12 years old.

      • designer_dick

        It might not matter so much in second and third world nations where expectations are lower, but it most certainly does matter in first world, developed markets like Europe and the US, where there’s much more of a focus on safety. That ’90s Nissan Sentra you mentioned, which was sold as the Tsuru in Mexico, folds like a sheet of newspaper in a crash.

        • helloWorld

          but really, how far are we from becoming mexico? we already have 8 year loans on cars. And under trump, they are rolling back safety and emission requirements. I think they could keep the current fleet for another 10 years with minor modifications

    • MarketAndChurch

      The issue isn’t the market turning on SUV’s. Toyota and Honda and Kia and Hyundai and GM and Ford are all launching or have launched new SUV’s, their new SUV’s have or will have hybrid powertrain options, and very advanced safety and convenience tech options are becoming standard on even entry level models. Not to mention that all of those brands are pioneering or popularizing design trends.

      The issue, as you rightly point out, is the aging lineup. With an aging lineup, you don’t have fuel efficient options compared to your rivals, or advanced generational leaps in engineering, or the latest tech and design trends.

      The American market will remain an SUV/Truck market for at least the next 6 years, the European one will remain a compact vehicle market, and the Asian market a mix of everything. The question is whether or not FCA will be able to refresh that lineup, or go bankrupt.

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