The World's 4th Largest Carmaker is Born

Automobile giants Peugeot S.A. (PSA) and Fiat Chrysler Automobiles N.V. (FCA) have completed their much awaited US$ 52 billion merger to create an automobile behemoth that ranks 4th on the list of largest carmakers. The newly formed entity, christened Stellantis N.V. is touted to cut over US$ 6 billion worth of costs, marrying two historic automobile companies.

In spite of the enthusiastic welcome it has received from investors, Stellantis has its work cut out. The automobile industry is heading head first into a turbulent period of “creative destruction”, as electric vehicles surge towards becoming mainstream and autonomous vehicle technology threatens to further disrupt the industry that is already reeling from the after-effects of a sales slump. Take the example of large technology companies which are gearing up to foray into the automobile market, such as Apple’s Project Titan, Google’s Waymo, Intel’s Mobileye acquisition, and chipmaker Nvidia’s ongoing efforts to innovate in the autonomous vehicles space. With Tesla dominating western markets and Nio surging ahead of the pack in electric vehicle sales in China, Stellantis has its work cut out for itself.

Stellantis will also seek to revive its fortunes in the Chinese market, where FCA and PSA have struggled over the years. China is the most lucrative market in the automobile industry and will pose a real test to Stellantis’ growth ambitions. The capacity utilisation of the carmaker is also quite paltry, posing questions as to how Stellantis will handle its overcapacity issues. While the party at Stellantis may have just begun, it may not be long until shareholders begin to question how the company plans to resolve its problems.

Further Readings:

After long journey, Fiat Chrysler and PSA to seal merger to become Stellantis

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