MILAN (Reuters) – Fiat Chrysler and PSA will seal their highly anticipated merger on Saturday to create Stellantis, the world’s fourth-largest automotive group with enough pockets to finance the move to electric driving and take on bigger rivals Toyota and Volkswagen.
It took more than a year for the Italian-American and French automakers to finalize the $ 52 billion deal, which turned the global economy upside down by the COVID-19 pandemic. They first announced plans to merge in October 2019 to create a group with annual sales of approximately 8.1 million vehicles.
Shares in Stellantis, which will be led by current PSA CEO Carlos Tavares, will be traded in Milan and Paris on Monday and New York on Tuesday.
Now analysts and investors are turning their focus to how Tavares plans to address the huge challenges the group faces – from excess manufacturing capacity to a pitiful performance in China.
Tavares will hold his first press conference as CEO of Stellantis Tuesday after calling the NYSE with Chairman John Elkann.
FCA and PSA have said that Stellantis can cut annual costs by more than 5 billion euros ($ 6.1 billion) without plant closures, and investors will be interested in more details on how it will do this.
Marco Santino, a partner at consultants Oliver Wyman, said he expected Tavares to reveal the outline of his action plan quickly, but without revealing too many details initially.
“He’s proven to be the kind of person who prefers action over words, so I don’t think he’ll make loud statements or try to over-sell targets,” he said.
Like all car manufacturers worldwide, Stellantis will have to invest billions in the coming years to transform its vehicle offering into the electric age.
But other urgent tasks loom, including reviving the group’s lagging fortunes in China, rationalizing the vast global empire, and tackling massive overcapacity.
“It will be a step-by-step process, also to make the market better appreciate every move. I don’t think we’ll have all the details in a year, ”said Santino.
FCA CEO Mike Manley – who will lead Stellantis’ key North American operations – has said 40% of the automaker’s expected synergies would come from the convergence of platforms and powertrains and from optimizing R&D investments, 35 % of savings on purchases, and an additional 7% of savings on sales activities and overheads.
($ 1 = 0.8226 euros)
Reporting by Giulio Piovaccari. Editing by Mark Potter