World's Fourth-Largest Automaker Clears Major Hurdle

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Blame EU regulators for the holdup.

Exactly one year ago, Fiat Chrysler Automobiles and French Groupe PSA announced plans for a 50-50 merger. The new automaker, called Stellantis, will see all of FCA's brands, such as Jeep, Dodge, and Fiat, become one with Peugeot, Citroen, and Opel. Upon completion of the deal, Stellantis will become the world's fourth-largest automaker. Then came European antitrust concerns regarding the new automaker's commercial truck business. And then the coronavirus pandemic struck.

This all caused delays but FCA and PSA were equally determined to move forward. Last month, the boards of both companies agreed to amend the agreement in order to satisfy each side's shareholders.

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Still, the EU's concerns remained unresolved. Today, however, it appears they have been. Reuters reports the automakers have won EU approval for their $38 billion merger after PSA proposed an interesting solution to regulators. It will actually help strengthen its joint van venture with Toyota by increasing production and selling those vans for lower prices. In addition, PSA and FCA will allow their dealerships to repair rival brands.

These actually weren't significant changes, but rather involved changing some wording in the agreement. Assuming no additional hurdles arise, the merger's completion should happen in the first quarter of next year. Does this mean we'll soon see Peugeots and Citroens sold in North America?

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Well, we'll possibly see the former, but FCA will really benefit from the PSA's small vehicle platforms, plus their advancements in electrified platforms. PSA, meanwhile, will suddenly gain access to the highly profitable world of trucks and SUVs. Now, this doesn't mean we're going to see a Peugeot-badged Jeep Wrangler, or anything similar. It's simply not happening.

But it's the aforementioned synergy between the automakers that's the driving force behind the merger. They need each other in an increasingly globalized business climate. Now that the EU's regulatory concerns have been reportedly resolved, nothing stands in the way of meeting the previously announced February 2, 2021 signing deadline.

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Source Credits: Reuters

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