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Fiat Chrysler-Peugeot S.A. seal $52 billion deal creating ‘Stellantis’

By Saima Siddiqui 
Updated Date
Fiat Chrysler-Peugeot S.A. seal $52 billion deal creating ‘Stellantis’

Lucknow: World’s eighth largest auto-maker, Fiat Chrysler (FCA) and Europe’s second largest vehicle manufacturer
Peugeot S.A. came together by signing a deal worth $52 billion, on Saturday, creating Stellantis.

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It took over a year for the Italian-American and French automakers to finalise this multibillion deal, that too when the global economy was upended by the COVID-19 pandemic. The news of their merger had first surfaced in 2019 when an official announcement was made by the automakers in October, to create a group with annual sales of around 8.1 million vehicles.

“The merger between Peugeot S.A. and Fiat Chrysler Automobiles N.V. that will lead the path to the creation of Stellantis N.V. became effective today,” the official statement of two automakers had read.

Shares in Stellantis, which will be headed by current PSA Chief Executive Carlos Tavares, will start trading in Milan and Paris on Monday, and in New York on Tuesday.

The main challenge concerning  Tavares right now is laying a plan to address the huge challenges facing the group, from excess production capacity to a woeful performance in China, as per analysts and investors.

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Meanwhile, Tavares is likely to hold his first press conference as Stellantis CEO on Tuesday, after ringing NYSE’s bell with Chairman John Elkann.

Bothe the leading auto-manufacturers, FCA and PSA, have said Stellantis can cut annual costs by over 5 billion euros ($6.1 billion) without plant closures, and investors will be keen for more details on how it will do this. However, like all global automakers, Stellantis will be needed to invest billions in the coming years to transform its vehicle range for the electric era.

A partner at consultants Oliver Wyman, Marco Santino, said that he expected Tavares to disclose the outlines of his action plan soon, but without divulging too many details at first. “He has proven to be the kind of person who prefers action to words, so I don’t think he will make loud statements or try to over-sell targets,” he said.

Santanio also said that the company will also have to tackle other issues, including reviving the group’s lagging fortunes in China, rationalising its huge global empire and addressing massive overcapacity.

“It will be a step by step process, also to allow the market to better appreciate every single move. I don’t think we will have all the details before one year,” he said.

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Meanwhile, as per FCA CEO Mike Manley, who will head Stellantis’ key North American operations, 40% of the carmaker’s expected synergies would come from convergence of platforms and powertrains and from optimising R&D investments, whereas nearly 35% from savings on purchases, and another 7% from savings on sales operations and general expenses.

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