Shareholders of Fiat Chryslerom Tomobiles and the French manufacturer of PSA, Peugeot, Citroen and Opal Cars voted Monday to join efforts to achieve the scale needed to survive in an industry plagued by technological change and plagued by epidemics.
The new company, called Stalentis, will employ 400,000 people and includes Jeep, Ram Trucks, Alfa Romeo and Maserati brands. Following the merger of Toyota, Volkswagen and Renault-Nissan-Mitsubishi, it will be the world’s fourth largest carmaker, based on vehicle sales during the first nine months of 2020.
Fiat Chrysler and PSA officials agreed to merge in late 2019 and have been preparing details and seeking regulatory approval ever since.
Together, both companies believe they have a better chance of avoiding the transition to electric vehicles, which is happening faster than most analysts predict.
“We live in a profound era of change in our industry,” said John Elk, chairman of Fiat Chrysler. “We believe that the coming decade will give a new definition to dynamism as we know it.”
The new company, which will be based in the Netherlands with large operations in France, Italy and the United States, will face major challenges. In China, neither Fiat Chrysler nor PSA have a strong presence, are the largest car market in the world, and they are slow in introducing electric vehicles.
The two companies have some assets, such as popular Jeep and Ram brands, said Peter Wells, a professor at Cardiff Business School in Wales. As people buy more goods online, Fiat and PSA delivery vans are selling like hot cakes in Europe.
But Fiat Chrysler and PSA also have serious problems, Mr Wells said, such as the assembly lines used in the egg, which would make it difficult for them to deliver on their promises not to close the union and share fuse government, major shareholders, factories.
PSA and Fiat Chrysler have “a bunch of structural problems that don’t go away easily,” Mr Wells said.
French Economy and Finance Minister Bruno Le Mar મારે and his Italian counterpart Stefano Patuનેneli said in a joint statement that they “warmly welcome” the merger, which will create “new European champions”.
“Both governments will also focus on Stellantis’ contribution to the industrial employment of Italy and France.”
Fiat pulled out of merger talks with Renault in 2019 due to interference by the French government.
Fiat and PSA have been hit hard by the epidemic. PSA’s vehicle sales fell 30 percent in the 11 months to November, while Fiat Chrysler saw 30 percent fewer car and truck sales in the nine months to September, according to a recent report.
The damage caused by the epidemic prompted companies to adjust to the terms of the merger in September. Fiat Chrysler will have to pay special dividends to shareholders when the deal closes in January. The cut was reduced from અ 3 billion to ૨ 9.9 billion, or 6 6.6 billion. In return, Fiat Chrysler shareholders will receive a large contingent of potential future payments.
Mr Elka said the epidemic had made the reason for the merger “more pressing”.
Carlos Towers, PSA’s chief executive, will hold the same degree in the new entity. Mr. Elkan, a descendant of the Agnelli family in Italy and a descendant of the man who founded Fiat in 1899, is in line to become chairman. Mike Manley, Fiat Chrysler’s chief executive, will manage the American operations of the joint venture.
“We are ready for this merger,” Mr. Towers said during a meeting of PSA shareholders, which was conducted online. He said the merger would allow companies to share the cost of developing electric vehicles and allow PSAs to enter the American market while reducing its dependence on Europe.
Mr Wells of Cardiff Business School said that for all its faults, the merger gave Fiat Chrysler and PSA their best chance to survive in a brutally competitive environment.
“If it hadn’t passed, the result would have been worse,” Mr Wells said. “The signatures would be on the wall for these two companies.”