Maybe the Merger of Fiat Chrysler and PSA Won’t Happen After All

While the coronavirus and downturn in all auto manufacturer’s fortunes have impacted everything car-related the merger of Fiat Chrysler and PSA Group keeps marching on. Until now. The proposed $50 billion mergers is not a done deal, and it is especially not now. Antitrust is as big a deal in Europe as it is in the US. Regulators have focussed on what would become the high market dominance of small vans. No, really. What this means is maybe the merger of Fiat Chrysler and PSA to become the fourth largest auto manufacturer won’t happen after all.

Small vans are almost invisible in the US. But in Europe, they’re a big thing. Chalk it up to small, narrow roads and congested city thoroughfares. Plus, they’re fairly inexpensive. Regulators know that and are looking at how large a slice of the pie a Fiat Chrysler/PSA merger would create.

If Fiat Chrysler and PSA can’t assure the regulators to move the merger along then it is delayed at minimum

The Fiat Ducato is also marketed as Citroën Jumper, Peugeot Boxer and as the Ram ProMaster
The Fiat Ducato, also known as the Ram ProMaster | Getty

What makes this an all-hands-on-deck moment is that the whole merger comes down to this Wednesday. If Fiat Chrysler and PSA can’t assure the regulators or at least make some concessions to move the merger along then it is delayed at minimum. Courtesy of the antitrust regulators.

If the merger concerns aren’t allayed then a four-month investigation is required according to Automotive News. That’s one part of the problem. The other is that usually in situations like this the longer the decision takes the better for a complete collapse of the deal. Added to this is the overriding COVID-19 ramifications.

Each day that goes by is putting Fiat Chrysler and the PSA Group further in the hole

White Fiat cargo vans lined up for delivery in the UK in the
New Fiat Doblo cargo vans parked at Avonmouth docks near Bristol, UK. | Getty

Neither company is making much money right now. Each day that goes by is putting them further in the hole. Fiat Chrysler has some rather stagnant models like the Dodge Charger and Chrysler 300 that are just hanging on. And Fiat is seeing horrendous losses. 

At some point, the encumbrances will become overbearing. Then the merger talks are off. That would be a disaster after all of these months of anticipation. The good news is that where one company dominates in a particular country the other has little or no footprint. Besides the “economy of scale” that makes mergers like this seem ripe for cost savings there is a distinct advantage for global penetration.

Peugeot or Citroen models being badged as a Chrysler or Dodge is appealing

Opel vans lined up at show
BRUSSELS, BELGIUM – JANUARY 13: Opel Vivaro panel vans light commercial vehicles on display in Brussels, Belgium. The Opel Vivaro is also marketed as Vauxhall Vivaro and as Renault Traffic, Nissan NV300, and Fiat Talento. | Getty

The idea of some Peugeot or Citroen models being badged as Chrysler or Dodge models is appealing. Also, giving Jeep a chance to expand in Europe and South America where PSA has a big presence looks to be a massive opportunity. And besides these examples, there are plenty more advantages. But look at all of the vans manufactured that would exist under a merger. Citroen has the Berlingo van. Peugeot has the Partner van. Fiat makes both the Doblo Cargo van and Fiorino van. Opel and Vauxhall make the Combo Cargo. Them’s a lot of minivans.

We expect a compromise where a certain brand’s van would be discontinued

Unsold Vauxhall vans are parked inside the Vauxhall car plant in Luton, north of London. | Getty

PSA Merger Good News/Bad News For Jeep and Ram

But a merger means you combine models and manufacturing. Even a Fiat Chrysler/PSA merger would not want that many of its brands manufacturing separate, unique vans. We would expect a compromise where a certain brand’s van would be discontinued. It would be replaced by another manufacturer’s product within the Fiat Chrysler/PSA umbrella. 

So in the end maybe a simple compromise will move the merger to the next stage. Ultimately the final, assembled group of manufacturers might still happen. We’ll know by the end of the day this Wednesday.