Fiat Chrysler Automobiles and PSA Group merger plan faces difficulty
Last year, the two automotive majors Fiat Chrysler Automobiles and PSA Group announced a 50/50 partnership. The new entity that could have been born from this merger was said to be the world's fourth largest automobile manufacturer. However, this merger has hit an obstacle, with its small van market share as indicated by the EU regulators.
Both the companies have been jointly manufacturing small vans under a 50-50 partnership called Sevel that is based out of Italy and is the largest van assembly plant of Europe, which generally builts 1,200 units per day before being affected by COVID-19. It has been reported that jointly, these two brands manufacturer 7.5 lakh units of light commercial vehicles, commanding a market share of 34 percent, way above Renault and Ford's 16 percent, VW's 12 percent and Daimler's 10 percent. The EU regulators have raised concerns over the overlapping of businesses by these two entities (Sevel and the one that comes out of the FCA-PSA merger) in the same market and also affecting the competition. They have given two days to PSA and FCA for an explanation of their plan that will not distort or prevent competition, making it a level playing field for all automobile manufacturers.
In case PSA and FCA fail to justify their plans to the EU regulators, they latter is said to block all the merger plans and initiate its own four-month investigation. The partnership formed out of PSA and FCA was expected to help both the brands in catering to the slow demand in sales as well as divide the costs of development of cleaner vehicles to comply with the stricter emission norms.