An iconic Detroit automaker is merging with another European auto company.
Shareholders of Fiat Chrysler and PSA Peugeot decisively voted Monday to merge the U.S.-Italian and French carmakers. The deal has been in the works for more than a year.
The merger is built on the promise of cost savings in the capital-hungry industry. But what remains to be seen is if the long-sought tie-up will be able to preserve jobs and heritage brands in a global market still suffering the shakeout from the pandemic.
The new company will be called Stellantis. The deal is expected to close January 16, and it will become the world's fourth-largest auto maker. Stellantis will have the capacity to produce 8.7 million cars a year, behind Volkswagen, Toyota and Renault-Nissan.
This will be the third time Chrysler has been part of a merger with a European automaker. Its first in 1998 with Daimler-Benz fared badly, with the merger breaking up a decade later.
Chrysler’s marriage with Fiat in 2009, after their automaker’s restructuring after filing for bankruptcy protection, proved more successful.
Carla Bailo is the CEO of the Center for Automotive Research. She believes the new company will benefit from the mix of cultures.
“Those companies that have really really done well in the mergers over the years are those that have allowed the individual companies to keep their cultures and their personalities intact,” says Bailo.
Analysts say the merger may help open the Chinese and European markets to some U.S. name plates that have struggled to do so in the past. The merger with PSA may also help both sides prepare for the growing electric vehicle market.
But some costing cutting is also likely.
Auto industry journalist Paul Eisenstein is with TheDetroitBureau.com. He says the merger should be good for Jeep and Dodge Ram, but some other well-known names might disappear.
“In particular, the two namesake brands, Fiat and Chrysler,” says Eisenstein. “And I would not be surprised if either or perhaps both of those wind up going away.”
The newly merged company will be headquartered in Europe.
This post was updated Monday, January 4 at 3:45 p.m.