Owner of Peugeot, PSA Group and Fiat Chrysler in Merger Talks

The merger would create an auto giant that would rank as the world’s fourth largest by volume.

PSA Group, the French owner of Peugeot, is in merger talks with its U.S.-Italian rival Fiat Chrysler, the group has confirmed. 

The news comes just a few months after a proposed tie-up between Fiat Chrysler and French carmaker Renault failed.

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Creating a giant

A deal between the two carmakers would create a $50 billion trans-Atlantic auto-giant that would rank as the world’s fourth-largest by volume. PSA Group on Wednesday confirmed the existence of the talks.

In a statement, the group said: “PSA Group confirms that discussions are in progress with the aim of creating one of the world’s principal automotive groups."

The talks mark Fiat Chrysler's second attempt at a merger this year. It pulled out of an agreement with Renault in June but has been keen to pool resources with another firm.

As carmakers pull away from fossil fuels and toward electric and autonomous vehicles they grapple with a rather expensive upheaval. Joining forces now sounds like a good idea.

The potential merger would not be without problems, however. It would face both political and financial hurdles.

The merger is just in the early stages but if it were to be successful, PSA chief executive Carlos Tavares would be expected to lead the new group. Last April, Tavares showed interest in buying Britain’s largest carmaker, Jaguar Land Rover.

Jobs to be on the line

However, its Indian owner, Tata, said the company was not for sale. 

Brian Studioso, an automotive analyst at Creditsights, a debt ratings agency told The Guardian that if Tavares is involved in the talks, you can likely count on jobs being lost.

“European auto [manufacturer] consolidation is often more of a cost-reducing exercise than a revenue-enhancing one, and jobs will inevitably be on the line, or at the very least called into question,” Studioso wrote.

The merger would bring a number of brands under one roof including Alfa Romeo, Citroen, Jeep, Opel, Peugeot, and Vauxhall.

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