Fiat Chrysler shares rose nearly 1% in Milan,
while Peugeot gained almost 2% in Paris trading.
Both the Peugeot and Fiat brands are strong on
small car technology, with significant overlap
in Europe. Manley said that the convergence
of platforms would be “an early target” that will
likely take two years to achieve.
Nick Oliver, a management professor at the
University of Edinburgh Business School, said
that most of the savings are likely to come from
cost cuts as ’’it is not clear how the merger will
boost joint revenues.”
‘’Neither partner has products that can easily be
sold under the others’ brands in new or existing
markets. Both are weak in China, the world’s
largest car market, while their center of gravity is
in the mature European market,” Oliver said.
Meanwhile, the deal will give Peugeot the
opportunity to try to sell more in the U.S., where
it does not have much of a presence. With 2,640
dealers across the U.S., Fiat Chrysler would be a
ready distribution network.
PSA specializes in small and medium-sized cars,
which have fallen out of favor with U.S. and even
some international buyers who prefer SUVs and
trucks. PSA could build its own vehicles off the
underpinnings of Fiat Chrysler’s hot selling Jeep
SUVs and Ram trucks.
The new company will be legally based in the
Netherlands, and traded in Paris, Milan and
New York.
The executives played down the significance
of the new entity’s name and headquarters
location, but both are symbolic choices that will
signal who is in the driver’s seat.