This is the new logo of the Stellantis group, which incorporates Fiat Chrysler and Peugeot Citroën. Picture: REUTERS
This is the new logo of the Stellantis group, which incorporates Fiat Chrysler and Peugeot Citroën. Picture: REUTERS

Fiat Chrysler and PSA sealed their long-awaited merger on Saturday to create Stellantis, the world’s fourth-largest auto group with deep enough pockets to fund the shift to electric driving and take on bigger rivals Toyota and Volkswagen.

It took more than a year for the Italian-American and French automakers to finalise the $52bn deal, during which the global economy was upended by the Covid-19 pandemic. They first announced plans to merge in October 2019, to create a group with annual sales of about 8.1-million vehicles.

Brands housed under Stellantis include Peugeot, Citroën, DS, Opel, Vauxhall, Alfa Romeo, Fiat, Lancia, Maserati, Dodge, Jeep, Chrysler, RAM and Abarth.

Shares in Stellantis, which will be headed by current PSA CEO Carlos Tavares, start trading in Milan and Paris on January 18, and in New York on January 19.

Now analysts and investors are turning their focus to how Tavares plans to address the huge challenges facing the group — from excess production capacity to a woeful performance in China.

Tavares will hold his first media conference as Stellantis CEO on January 19, after ringing NYSE’s bell with chair John Elkann.

FCA and PSA have said Stellantis can cut annual costs by more than €5bn without plant closures, and investors will be keen for more details on how it will do this.

Marco Santino, a partner at consultants Oliver Wyman, said he expects 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.

Like all global automakers, Stellantis needs to invest billions in the years ahead to transform its vehicle range for the electric era.

But other pressing tasks loom, including reviving the group’s lagging fortunes in China, rationalising its huge global empire and addressing huge overcapacity.

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

FCA CEO Mike Manley — who will head Stellantis’s key North American operations — has said 40% of the carmaker’s expected synergies would come from convergence of platforms and power trains and from optimising R&D investments, 35% from savings on purchases, and another 7% from savings on sales operations and general expenses.

Reuters

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