Under the environment of the global automobile market downturn, group warming among enterprises is also accelerating. For example, the merger of Groupe PSA (Groupe PSA) and Fiat Chrysler (FCA), which has recently been heated up, finally has an official real hammer.

Today, PSA Group issued an official statement stating that PSA Group is in discussions with Fiat Chrysler Group, with the goal of creating a new global leading automotive group.

The best partner for merger

A few words in the announcement did not reveal more, but it is clear that if the merger is really successful, the two parties will create an automotive empire that rivals the Volkswagen Group and reshape the global automotive industry. Regarding the cooperation between the two parties, industry analysts have given a very optimistic view, believing that they are the best partners for the merger.

"In our opinion, the merger of FCA and PSA is more logical than the previous FCA and Renault transaction, and the probability of success is much greater." Bernstein analyst Max Warburton (Max Warburton) Said in the report.

Evercore analyst Arndt Ellinghorst said: “We believe that this will trigger more rational industry behavior around capital allocation, and compared with the potential FCA and Renault merger, this merger will More substantial."

Due to the complementary products and geographic location of the two companies, PSA is considered a logical merger partner of FCA. Earlier this year, the two sides discussed possible cooperation, but the merger of the two parties has not been smooth sailing, which is quite related to the two-heartedness of the two parties.

In order to further expand the group's business, PSA Group has been sparing no effort to explore more cooperation or mergers. PSA Group CEO Carlos Tavares (Carlos Tavares) has said that he is open to transactions and hopes Fiat, General Motors and Jaguar Land Rover will become ideal partners.

Let's look at FCA again. Since the beginning of this year, it has been actively promoting the transaction with Renault. Due to the relationship between the French government and Nissan, the transaction was shelved in the middle of the year.

Hug Tuan warming in the cold winter

Why did FCA and PSA choose to discuss their marriage at this time?

"First of all, the global auto market has declined severely, and automakers are facing greater market pressure. In particular, the two parties have not performed well in the big market of China. The choice of merger is to seek more development, and the other is to complement each other's advantages." Wu Hui, research director of the research institute, told a reporter from China Automobile News that this is inseparable from the current global market development and the situation of both parties.

After Fiat and Chrysler merged to form FCA in 2014, it has eight sub-brands including Fiat, Dodge, Lancia, Alfa Romeo, Maserati, Ferrari, Jeep, and Chrysler, but their performance has been poor. This is also a frequent rumor of mergers and acquisitions. s reason.

Data show that in the second quarter of this year, FCA Group's total global shipments were 1.157 million vehicles, a year-on-year decline of 11%. The net profit of the business was 800 million euros, and the adjusted net profit was 900 million euros. Due to the continued decline in sales of Chinese joint ventures, FCA’s consolidated shipments in the Asia-Pacific region were 35,000 units, a year-on-year decrease of 34%.

PSA Group's performance announcement for the first half of 2019 shows that PSA Group achieved overall revenue of 38.34 billion euros, a decrease of 0.7% compared with the same period in 2018. Among them, the automotive sector revenue reached 30.378 billion euros, a decrease of 1.1% compared with the same period in 2018. Affected by the decline in sales of partners, exchange rates and globalization, the group's overall revenue dropped slightly year-on-year.

Data show that in the first half of this year, PSA’s global car sales were 1.9 million, a year-on-year decrease of 12.8%. Among them, the Latin American market sales fell by 29.3%; the Chinese market sales fell by 62.1%, with a loss of more than 300 million euros.

Recently, PSA Group has also given corresponding expectations for the future global automotive market. In 2019, the European automotive market will decline by 1%, and the Latin American, Chinese and Russian markets will decline by 5%, 7% and 2% respectively.

Wu Hui said that the businesses of PSA and FCA in China have been lagging behind their competitors. Even if the merger is successful, it is unlikely to drive revenue growth quickly.

What is the foreground geometry after merging?

In fact, it is not only FCA and PSA, but also cases of cooperation in the automotive field. For example, Volkswagen said in July this year that it would cooperate with Ford on electric vehicles and autonomous vehicle technology, while Toyota is strengthening its relationship with partners such as BYD. Faced with the continued decline in the auto market, it is not difficult to understand the behavior of vehicle companies holding a group for warmth.

"In particular, the current research and development costs for automotive electrification and autonomous driving are very high. In addition to strong car companies such as Volkswagen who have more capital and energy to invest in transformation, some weaker car companies have performed more than they can do." Wu Hui said, The integration of new technologies and traditional cars has put a lot of pressure on development costs for car companies. Multi-party cooperation can effectively reduce R&D costs and jointly resist the cold winter. Whether it is platform development, manufacturing, or procurement, all parties need to unite, and joint cost sharing is a better choice for car companies. In addition, many cross-industry giants such as real estate companies and Internet companies have also begun to set foot in the field of new cars, and they have considerable advantages in technology and capital. This is also an important competitor for traditional enterprises.

"The development after the merger depends on whether the cooperation between the two parties can be done well. The merger of some companies was not very successful." Wu Hui said frankly that if things want to develop faster, the two parties should work in the field of electrification and intelligent networking in the future. More effort.

Wang Haiyang (pseudonym), assistant to the chairman of a certain car company, said that FCA is mainly high-end models, while PSA is mainly low-end models. The two sides have obvious complementarity in vehicle models. Of course, the performance of the two parties in the Chinese market is also not satisfactory. PSA’s joint venture in China, Shenlong Motors, is operating poorly. FCA’s sales in China mainly rely on the Jeep brand. However, the rapid development of independent SUVs in recent years has also brought it Great competitive pressure.

In the future, both parties need to change their mindsets if they want to do the Chinese market. In the past, many models of these two car companies in China were very ungrounded in their plans, and there was a big gap compared with German cars. Especially in terms of electrification, PSA has only begun to transform to electrification this year, and the pace of FCA's transformation has been even slower.

According to Carlos Tavares, Chairman of PSA Group Management Committee, PSA Group pays attention to the implementation of strategic plans, is ready for electrification, and is capable of accepting future technical challenges.

It is reported that PSA Group will launch a series of electric products including Peugeot 508L PHEV, 2008 and DS 3 CROSSBACK next year.

FCA stated that in the second half of the year, it will continue to focus on underdeveloped areas of business, including the Maserati brand and the European, Middle Eastern and African markets.

In Ehringhorst's view, due to the overlap of PSA and FCA's businesses in Europe, Latin America and China, this is an opportunity to achieve a "total synergy" of more than 7 billion euros in 2023.