NEW DELHI: The merger of American-Italian carmaker Fiat Chrysler Automobiles (FCA) and France’s PSA Group will have a positive impact on the India operations of the two automotive giants, said analysts in the automobile sector.
PSA has announced plans to launch its Citroen range from 2020-21, while FCA has been in India for years and has achieved limited success with its Jeep Compass.
“The merger is a win-win for both the companies. Given that FCA has been in India for quite some time, the merger might give PSA access to Fiat’s suppliers, dealers and more. For Fiat, the merger is likely to improve its negotiation power across the value chain. The merger also gives them a chance to start planning how to go ahead in India,” said Puneet Gupta, director, automotive forecast, IHS Markit.
He added that the two OEMs (original equipment manufacturers) can even share resources such as engines, platforms and more. “There are lots of synergies possible. They can look at having a common dealer network in India for wider reach,” Gupta said.
FCA and PCA have approved the merger of their operations to create a new group, which could take on more nimble rivals in an ever-challenging market. The new entity will become the world’s fourth-largest global automobile maker with a capacity to produce 8.7 million vehicles per year. At present, only three passenger vehicle makers — Volkswagen, Toyota Motor Corp and Renault Nissan Alliance — has bigger global sales volume than the combined sales of PSA and FCA.
“As the companies would become more integrated, maybe their larger scale would give them more capabilities in terms of effective geographic coverage. This could enable them to address the Indian market more effectively,” said Pedro Pacheco, senior research director (Germany) in Gartner’s CIO Research Group. However, he anticipates no big impact in the immediate future.
Merger comes at an opportune time for Fiat
The approval for the FSA-PCA merger comes months after FCA cancelled merger talks with PSA’s rival firm Renault. Fiat, which is facing a downturn in its markets, has been open for merger talks for quite some time, like other carmakers.