MILAN (Reuters) – Fiat Chrysler and PSA will seal their long-awaited merger on Saturday to create Stellantis, the fourth largest automotive group in the world with enough deep pockets to finance the switch to electric steering and face bigger rivals, Toyota and Volkswagen.
It took more than a year for Italian-American and French automakers to complete the $ 52 billion deal, during which the global economy was affected by the COVID-19 pandemic. They first announced merger plans in October 2019, to create a group with annual sales of about 8.1 million vehicles.
Shares in Stellantis, which will be led by current PSA chief executive Carlos Tavares, will begin trading in Milan and Paris on Monday, and in New York on Tuesday.
Now, analysts and investors are turning their focus to how Tavares plans to address the enormous challenges the group faces – from excess production capacity to poor performance in China.
Tavares will hold his first press conference as CEO of Stellantis on Tuesday, after ringing the NYSE bell with President John Elkann.
FCA and PSA said Stellantis could cut annual costs by more than 5 billion euros ($ 6.1 billion) without plant closures, and investors will be eager to get more details on how it will do so.
Marco Santino, a partner at Oliver Wyman, a consultancy, said he hoped Tavares would soon disclose the outline of his action plan, but without disclosing many details at first.
“He proved to be the type of person who prefers action over words, so I don’t think he will make statements out loud or try to sell too much to targets,” he said.
Like all global automakers, Stellantis needs to invest billions in the coming years to transform its range of vehicles for the electric age.
But other urgent tasks are looming, including reviving the group’s backward fortunes in China, rationalizing its huge global empire and dealing with huge overcapacity.
“It will be a step-by-step process, also to allow the market to better appreciate each movement. I don’t think we will have all the details before a year, ”said Santino.
FCA CEO Mike Manley – who will head Stellantis’ main operations in North America – said that 40% of the automaker’s expected synergies would come from the convergence of platforms and engines and the optimization of R&D investments, 35% savings on purchases and another 7% savings in sales and general expenses.
($ 1 = 0.8226 euros)
Reporting by Giulio Piovaccari. Editing by Mark Potter