Peugeot and Fiat in talks to become auto giant

Fiat Chrysler and Groupe PSA, the maker of Peugeot and Citroen cars, announced on Wednesday they were in merger talks that could propel them into the top ranks as the world’s fourth-largest automaker.

Italian-US carmaker Fiat Chrysler Automobiles confirmed in a statement that “there are ongoing discussions aimed at creating one of the world’s leading mobility groups” with France’s PSA after reports of the talks began to circulate.

A person with knowledge of the matter said on Tuesday that a merger, which is not guaranteed, would create a firm valued at about US$50 billion.

A merger would bring PSA access to the lucrative US market, while finally fulfilling the long-held goal of ex-FCA head Sergio Marchionne, who died last year, to merge the carmaker with another in order to survive escalating costs and global pressure to roll out electric vehicles.

The tie-up would make the new automaker the fourth largest in terms of sales behind Volkswagen, Renault-Nissan-Mitsubishi and Toyota, and would combine a host of well-known brands from Alfa Romeo, Jeep and Dodge to Citroen, Opel and Peugeot.

The negotiations come four months after talks to merge FCA with Renault broke down, a potential deal scuppered in part by resistance from the French government, which owns a stake in Renault as it does PSA.

Under the FCA-PSA merger, Carlos Tavares, the chief executive of Peugeot’s parent, Groupe PSA, would lead the company as CEO while John Elkann, chairman of FCA, would be chairman, the source said.

According to Bloomberg News, FCA’s board of directors was expected to hold an emergency meeting on Wednesday.