While negotiations were underway to conclude the rapprochement between the PSA and FCA groups, the Covid-19 came to cause trouble. The economic repercussions of the health crisis make it necessary to review the financial data of companies, which has the consequence of freezing the operation, at least temporarily.
The information was confirmed last December: two giants of the automotive industry were about to merge. PSA and FCA (Fiat Chrysler Automobiles) were to create the fourth largest group in the sector, including brands such as Peugeot, Citroën, Fiat, Opel, Jeep, and even Maserati.
It only remained to agree on the conditions of the operation. Negotiations which traditionally consist of estimating the valuation of each company, making projections of sales and turnover in the coming years, in particular in order to find the best distribution of the capital of the new structure.
If the discussions were well started, the situation has changed significantly in a few months, due, of course, to the coronavirus. Because beyond the health consequences, the virus will probably have an impact on the world economy. And the two groups involved in the merger should not be spared, while the pandemic leads to the closure of many factories in Europe and the United States.
Consequently, according to an internal source, quoted by AFP: " It will be necessary to review the initial financial conditions " For the time being, a cancellation does not seem to be on the agenda, but it seems difficult to envisage an effective rapprochement from the start of 2021, as it was originally planned.
Delay in electrification?
This postponement could cause additional worry to both groups. Because the merger would allow them to invest more in electric vehicles, sharing the development costs. It was therefore a way of respecting the rules imposed in particular by the European Union and of keeping the promise of Carlos Tavares, chairman of the PSA board, who had announced total electrification by 2025.
And today, the two companies seem to be a little behind. PSA can only really count on its Peugeot e-208, while FCA has yet to launch the marketing of its 100% electric models, the Fiat 500e and Centoventi.