PSA and Fiat Chrysler aim to create a beneficial partnership
Peugeot owner PSA and Fiat Chrysler are currently discussing a potential tie-up that could place both automakers in the lead in the industry. The partnership is in the work to cushion the harsh realities of the automaking industry such as regulatory and technological challenges.
Both groups affirmed in separate statements that they were in talks for a collaboration that will create one of the globe’s leading automakers. Fiat Chrysler initially let go of a potential merger with another leading automaker, Renault. John Elkann, chairman of the company said that the group hopes to pursue a different alliance since car manufacturers are faced with costly investments for emission reduction, electrification as well as autonomous driving technologies.
In the stock market today, Milan- listed Fiat Chrysler’s shares opened the market with a 10% increase while it ended the day on Tuesday with a 7.5% increase in New York. As for Peugeot, its shares rose by over 6%, hitting the highest price in over eleven years.
Despite these impressive numbers on the stock market, a partnership of both companies would face lots of challenges after overcoming the financial, political and governance hurdles. Automakers all over the globe are faced with a drop in demand due to the dramatic technology changes in the world. The volume report for both automakers for last year amounted to approximately 8.7 million vehicles a year ago taking fourth place. Volkswagen, Toyota and Renault/Nissan had 10 million units.
An analyst with Bernstein, Max Warburton said a possible combination of Peugeot and FCA would be a logical partnership with a better chance of succeeding. However, this was made in comparison to the previous deal of FCA and Renault. He also said the focus of such a partnership will be Europe. The supervisory board of PSA is scheduled to meet on 30, October to discuss the deal according to some sources. In the statement made by FCA, there hasn’t been any agreement yet.