A merger between Fiat Chrysler and the French PSA group was approved by both groups of shareholders on Monday.
The deal will create the fourth largest automaker in the world and comes two years after talks began.
The combined company will bring together well-known brands such as Peugeot, Citroen and Vauxhall from PSA with Fiat, Jeep and Chrysler.
Stellantis, which means shining with stars, will have 14 car brands under one roof, including niche players Maserati and Alfa Romeo.
Executives expect the combination to complete by the end of March and say it will bring significant cost savings.
This has raised concerns about the closure of some factories within the brands, including that of Vauxhall, which operates in the UK 3. 000 employees.
However, in November PSA promised not to close the factories after the merger, even though the combined group would have spare production capacity of nearly six million cars.
Tesla is often used as an example of this because it has a relatively low production rate compared to its larger competitors, but a much higher market value.
And US-based General Motors (GM), the world’s fifth largest auto brand in terms of production, has scaled back from many markets to focus on North America.
Stellantis will be ahead of GM and Ford in terms of global sales, but VW, the alliance between Renault, Nissan and Mitsubishi, and Toyota will continue to lag behind.
The new auto giant will be known as Stellantis – a name that the architects of the deal refer to as derived from the Latin verb stello, which means to cover with stars.
The reasons for the merger are rather down-to-earth. The auto industry is in a technological revolution. Electricity or fuel cell output is expected to take over from the internal combustion engine in the next two decades.
Cars themselves are likely to become increasingly connected and autonomous. Through the merger, the two companies can bundle expertise and resources – and save costs.
At the same time, the strength of PSA in the European market is combined with the muscles of FiatChrysler in North America.
That’s the theory – although it’s worth noting that mega-mergers don’t always work in this industry. The connection between Chrysler and the German giant Daimler at the end of the nineties, for example, later collapsed on the side of the road
The bosses hope the combined company will have more financial resources to compete with its larger competitors.
One area Stellantis is expected to focus on is China, the world’s largest auto market, selling 21 million vehicles each year.
« All groups may not be able to afford a restart in China, » said Philippe Houchois, an analyst at Jefferies Investment Bank.
However, managing such a large portfolio of brands is going to be a huge challenge for experts as they could be mutually contributing to sales.
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Fiat Chrysler Automobiles, Groupe PSA, Auto Industry, Peugeot, Carlos Tavares, Mergers and Acquisitions
World News – AU – Fiat Chrysler and PSA shareholders approve merger
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