AutoBeta(AutoBeta.net)12/18 Report--

After a month and a half, Fiat Chrysler (FCA) and Peugeot Citroen (PSA) officially confirmed the merger and issued a formal statement on December 18, but the title of the statement was wrong. "Peugeot Citroen" was written as "logo Citroen", and the statement has now been deleted by FCA.

According to the content, after the merger of FCA and PSA, the new company will have annual sales of 8.7 million vehicles and combined revenue of 170 billion euros, making it the fourth largest automobile group in the world after Volkswagen, Toyota and Renault-Nissan alliance. In the new corporate governance structure, John Elcan, chairman of FCA, will serve as chairman of the new company, and Tang Weishi, CEO of PSA, will serve as CEO of the new company.

It is understood that on October 30th, there were media reports that Peugeot Citroen was in talks with Fiat Chrysler on a merger; on October 31st, FCA and PSA agreed to merge, and the merger of the two companies will become the fourth largest automaker in the world.

As for the merger of FCA and PSA, FCA said the merger would help both sides cope with the challenges facing the global auto industry, including declining demand for cars and the high cost of developing new energy vehicles in response to stringent emission regulations.

Although FCA and PSA formed the new company half-and-half, PSA is expected to gain more rights to the new company. Tang Weishi, the CEO of the new company, will be responsible for cost-cutting, which means that PSA dominates the board of directors over FCA.

In the environment of the global economic slowdown and the downturn of the automobile market, automobile companies are facing increasing pressure, and the major automobile companies are working together to keep warm. It is understood that the new company merger agreement is expected to be signed by December 25, but the full merger of the two sides needs to be approved by the local antitrust authority, a process that will take about a year.

The merger is expected to take 12 to 15 months to complete after the MOU is signed, and is not expected to begin operation until the end of 2020 or early 2021 if the merger agreement is signed in December, FCA said.

In addition, according to Bloomberg, Dongfeng Motor is preparing to sell part of its stake in PSA in a move to promote a full merger of FCA and PSA to ease regulatory scrutiny of the merger of PSA and FCA. It is understood that Dongfeng Motor holds a 12.2% stake in PSA, worth about 2.2 billion euros. After FCA and PSA set up a new company, Dongfeng Motor may own about 6% of the new company.

It is worth noting that the annual sales of FCA and PSA will reach 8.7 million after the merger, making them the fourth largest automaker in the world, but the current development of the two companies in China is not optimistic.

In November 2011, Peugeot Citroen Group and Changan Automobile jointly funded Changan Peugeot Citroen (Changan PSA), this joint venture has been established for eight years, but in recent years, sales are terrible. Changan PSA mainly produces and sells high-end PSA brand DS models in China, but Changan PSA is abandoned by Changan Automobile and PSA due to low sales and profit losses.

Dongfeng Motor and DPCA, founded by PSA, also have poor sales. DPCA's sales in China include Dongfeng Peugeot and Dongfeng Citroen, but the sales of the two brands are hardly optimistic. Sales figures show that DPCA sold 9730 vehicles in October, down 47.4 per cent from a year earlier, and accumulated sales of 100779 vehicles from January to October this year, down 54.83 per cent from a year earlier.

GAC Fick, a joint venture between Fiat Chrysler and GAC GROUP, is also in trouble after complaints from dealers and car owners as well as frequent complaints about car quality problems. According to the data, GAC Fick sold 6035 vehicles in November, down 28.60 per cent from a year earlier, with cumulative sales of 63839 vehicles from January to November, down 44.49 per cent from a year earlier.

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