MILAN (AP) – Automobile shoppers across the globe are likely to see fewer vehicles and brands if the merger of Fiat Chrysler and France’s PSA goes through, but the new company will be big enough to compete in a fast-changing business that requires vast sums of money to develop autonomous and electric vehicles.
The two companies announced the merger Thursday that, if finalized, will create the world’s fourth-largest auto company worth $50 billion. But PSA will have the upper hand in the deal, with its cost-cutting CEO Carlos Tavares in charge and PSA controlling the new company’s board.
Both companies still have to agree on final provisions, but the deal could close by the end of the year.
Tavares, who used to run Nissan in the Americas and knows the U.S. market well, will not shy away from trimming unprofitable models and brands. He’s credited with turning around the Opel and Vauxhall brands in Europe, perennial money losers which PSA acquired from General Motors two years ago.
Bernstein analyst Max Warburton wrote in a note to investors that he’s confident Tavares can pull off combining the companies.