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Stellantis is official: FCA and PSA merger finally sealed

MILAN — 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 over a year for the Italian-American and French automakers to finalize the $52 billion 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 around 8.1 million vehicles. "The merger between Peugeot S.A. and Fiat Chrysler Automobiles N.V. that will lead the path to the creation of Stellantis N.V. became effective today," the two automakers said in a statement. Shares in Stellantis, which will be headed by current PSA Chief Executive Carlos Tavares, will start trading in Milan and Paris on Monday, and in New York on Tuesday. 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 press conference as Stellantis CEO on Tuesday, after ringing NYSE's bell with Chairman John Elkann. FCA and PSA have said Stellantis can cut annual costs by over 5 billion euros ($6.1 billion) 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 expected 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, rationalizing its huge global empire and addressing massive overcapacity. "It will be a step by step process, also to allow the market to better appreciate every single move. I don't think we will have all the details before one year," Santino said.

Feds investigating FCA sales fraud focusing on strange code word

The US government is currently investigating Fiat Chrysler Automobiles (FCA) over the possibility of sales fraud, and according to The Wall Street Journal, the investigation has revealed a strange phrase about a nonexistent "unnatural acts department." People knowledgeable about the term told The Wall Street Journal that this phrase was a "rallying cry." Basically, if it looked like the company, region, or dealer wasn't going to hit sales targets, this was a sign that some outside-the-box sales solutions were needed. People told the news outlet those solutions could include selling cars at a loss or having the dealer buy a fleet of customer test-drive cars. However, this could also be evidence of some less savory ways to boost sales. In addition to the investigation, the company is already facing at least one lawsuit from a dealer group that alleges it would bribe dealers to pad monthly sales figures. FCA had an incentive to maintain sales numbers as well, considering that it was claiming a long streak of increasing sales. Under scrutiny recently, the company changed its sales reporting practices and numbers for previous years. Under the old reporting methods, it was possible for dealers to sell cars, report the sales, and then cancel or "unwind" the sales later. This wouldn't count as a lost sale, but the car also couldn't be recorded as another sale later. As a result, an unscrupulous dealer could have hypothetically used it to "sell" a car one month and "unwind" it the next. If FCA knew about this, it's also possible the company could have pushed dealers to use the system for false sales, something the Feds theorize may be related to the "unnatural acts department" phrase. It's still entirely possible this "unnatural acts department" was just a corporate term for thinking of creative ways to meet sales goals. And selling cars at a loss is definitely unnatural for businesses that are trying to make money. Whatever the phrase truly meant to dealers, it certainly is bizarre. Related Video: News Source: The Wall Street JournalImage Credit: GIUSEPPE CACACE/AFP/Getty Images Government/Legal Chrysler Fiat FCA fiat chrysler automobiles fca us investigation

Fiat Chrysler, Peugeot announce merger as world's No. 4 carmaker

MILAN  — Fiat Chrysler and France's PSA Peugeot said Thursday they have agreed to merge to create the world's fourth-largest automaker with enough scale to confront big shifts in the industry, including a race to develop electric cars and driverless technologies. Italian-American Fiat Chrysler brings with it a strong footprint in North America, where it makes at least two-thirds of its profits, while Peugeot is the No. 2 automaker in Europe. Both lag in China, however, despite the participation of Peugeot's Chinese shareholder, Dongfeng, and are playing catching up in developing electric vehicles. Fiat Chrysler shares were trading up 9% at 14 euros in Milan, while PSA Peugeot shares were down 3.2% to 22.84 euros. The 50-50 merger is expected to offer savings of 3.7 billion euros ($4 billion), which the automakers expect to achieve without any factory closures — a concern of unions in both France and Italy where the carmakers have more overlap. Fiat Chrysler's strongest brands are Jeep SUVs and Ram trucks and it is focusing on relaunching its premium and luxury brands, Alfa Romeo and Maserati, with a focus on hybrid engines. It still makes smaller cars under the Fiat marquee, mostly for the European and Latin American markets. PSA Peugeot makes mostly small, city-friendly cars, family sedans and SUVs under the nameplates of Peugeot, Citroen and Germany-based Opel, which it bought in 2017. That is where the companies can expect to have the most overlap. The new company would be worth $50 billion, with revenue of 170 billion euros ($189 billion). It would produce 8.7 million cars a year — still behind Toyota, Volkswagen and the Renault-Nissan alliance, which make over 10 million each. Once a merger is finalized, PSA Peugeot CEO Carlos Tavares will be chief executive of the new company, with Fiat Chrysler Chairman John Elkann becoming chairman. Fiat Chrysler CEO Mike Manley will have a senior executive role. "This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity," Tavares said in a statement. Manley called it "an industry-changing combination," and noted the long history of cooperation with Peugeot in industrial vehicles in Europe. The 11-member board will be made up of five members from each company plus Tavares, who is locked in as CEO for five years.