Report: Fiat & PSA/Peugeot-Citroen set to Merge
Would become world's 4th largest automaker
By Michael Gauthier
December 14, 2008 11:22 AM
Filed Under: Citroen, Corporate/Financial, European, Fiat, Peugeot
Reports out of Italy have suggested that Fiat and PSA/Peugeot-Citroen are looking into the possibility of merging as a way to survive the current financial crisis. The news comes just days after Fiat's CEO, Sergio Marchionne, stated that the company would need to find another automotive partner to ensure the company's survival in light of the recent economic downturn.
The issue seems to have reached a high enough level that leaders in both France and Italy have held discussions on the matter. According to analysts a merger between the two companies would make sense, considering that both have extensive experience making small cars and the two have worked together since 1978 on joint projects such as the recent Peugeot Boxer, Citroën Jumper and Fiat Ducato vans. If the two companies were to merge their combined output would rival Volkswagen and Renault-Nissan, making the proposed company the fourth largest automaker in the world.
Any potential merger would take months to complete, but if such as tie-up does occur hopefully we can expect the return of the Citroen SM.
Comments
what about the idea of small and local brands? make the cars people want in your country - design there -build there and sell there - no compromised, global customer base - design clinic bloobers anymore! Create nimble and quick companies that live in their market, understand it and deliver for it! all the fuss with mergers and interests of the fdifferent parties involved doesn't work, or only works for one partner and the other bleeds, that has no future..size doesnt make things cheaper all the time, plus you loose connection to your customer -like who is proud of Jaguar in the UK theese days?
The merges are meant to be sharing the underpinning technologies, finances, labors, etc.; in addition, reducing duplications in both engineering and marketing (design, branding, etc.). Examples of local (relatively) brands: SEAT in Volkswagen Group, Holden (sells really well in its local market of Australia) in General Motors. So I personally believe that by sharing platforms, manufacturers are able to respond to niche markets more quickly, as the technologies are already mature and are off-the-shelf.
Even if nationalism is involved so that a brand becomes a national pride, which is not a singular case in terms of political science, it still needs the support of adequate technology and cost-effective production and management. You mentioned Jaguar: it's not a division of a big firm and consequently lacks the technological support; being small in scale, cost is less likely to be reduced as effectively as in a big firm. Additionally since the majority of Jaguar is owned by a group which not only lacks the experience in that specific product segment, but comes from a nation-state not being considered as technologically advanced, it's quite natural that few will be proud of it.
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