FCA and PSA merge to create Stellantis

Fiat Chrysler Automobiles (FCA) and Groupe PSA have successfully merged to become the world's fourth-largest car-maker in an effort to slash the costs of R&D and boost profit needed to take on its larger rivals.

Announcing the official creation of Stellantis on January 16, the union between the Italian-American conglomerate and the French car-making enterprise has taken more than a year.

Numerous obstacles were encountered, from red tape and a global pandemic through to delicate negotiations with unions to push the $US52 billion ($A68bn) deal through.

PSA and FCA first announced their intention to merge back in October 2019. At the time, it was said that by forming a giant car-maker that manufactures around 8.7 million vehicles annually, Stellantis would have the economies of scale needed to fund future tech like pure-electric cars and autonomous driving tech and be profitable.

Ownership of the new merged company is a 50/50 split between PSA and FCA's shareholders, with the French group's shareholders set for a €5.5 billion ($A8.6bn) dividend, while the FCA's owners bag a €3 billion ($A4.7bn) pay-off.

Attracting PSA to FCA is access to the North American market, while Fiat-Chrysler's desire to merge with its French rival was bound by its dire need to have access to Peugeot-Citroen's pure-electric technology following a chronic lack of investment in electrification.

This was amply demonstrated last year when FCA had to 'pool' with EV brand Tesla to meet average CO2 emissions within the EU to avoid costly fines.

Now in charge of the merged entity, former PSA chief Carlos Tavares will have a lengthy to-do list.

The most pressing task is an excess production problem, plus its sales stumble in markets like China.

Despite Tavares being known as a ruthless cost-cutter, for now plant closures will be avoided.

Investors were told that FCA and PSA will save more than €5 billion ($A7.8bn) following the merger, although Stellantis has not detailed how these savings will be realised.

Despite the takeover, PSA says it will take 12 months to "think about" whether it will enter the US sales market.

But if under the Joe Biden administration new CO2-based emissions regulation or taxation is introduced, Stellantis says it will be well positioned to rapidly introduce low-emissions vehicles.

In case you're wondering, the unusual sci-fi sounding name 'Stellantis' is a play on the Latin word 'stello', with the meaning 'to brighten with stars'.

The full list of the 14 brands that now fall under the Stellantis are: Peugeot, Citroen, DS, Opel/Vauxhall, Alfa Romeo, Fiat, Lancia, Maserati, Dodge, Chrysler, Jeep, RAM and Abarth.