FCA rebuffs PSA – for now

Remember when everybody wondered how Peugeot was going to make a US comeback without any US infrastructure? Well, its parent company, PSA Group, seems to have had a pretty good idea about that.

The French-Chinese giant made a play for the Italian-American automotive group, Fiat Chrysler Automobiles, but The Wall Street Journal reports its advances have been rejected by Turin.

After swallowing German car-maker Opel (and its British Vauxhall brand) from General Motors in a 2017 takeover, PSA wants to add to its global footprint by taking over FCA.

A successful takeover attempt would raise the PSA Group’s brand portfolio from just Peugeot, Citroen, DS and Opel/Vauxhall and also include Fiat, Lancia, Alfa Romeo, Maserati, Dodge, RAM, Jeep and Chrysler.

It would take a group with no footprint at all in North America to a strong one, with solid positions in the lucrative full-size pick-up market as well as a national dealer network.

Yet Axor, the Agnelli family holding company and the biggest stakeholder in FCA, rejected the approach for now, and the two parties are no longer talking, according to The Wall Street Journal.

While the two sides agreed that there was product and production potential, the sticking point was that the Agnelli family, lead by John Elkann, didn’t want the takeover to be paid for with PSA stock, rather than cash.

PSA and its controlling Peugeot family, on the other hand, didn’t want to put itself into more debt while it was still chewing on its Opel takeover.

It’s been widely known for years that FCA is up for sale and a takeover is just a matter of time and price, with the only rider that the late FCA boss, Sergio Marchionne, and his successor, Mike Manley, were opposed to selling it off brand by brand.

"I want to find areas where cooperation – whether it is partnerships, whether it's joint ventures or whether it is deeper levels of equity co-operation that makes sense for us and whoever that is -- give better vehicles to our customers and a better return to our shareholders," Manley told a media conference at this month’s Geneva auto show.

"I'm very open to it," he reiterated.

A combination of PSA and FCA would finally give both parties the economies of scale and muscle they couldn’t dream of alone, raising their annual sales to around nine million vehicles a year.

That would place them just behind Toyota, the Volkswagen Group and the Renault-Nissan-Mitsubishi alliance, all of which retail more than 10 million cars a year.

PSA has tried to buy in to FCA once before, but shelved its plans in 2015 in favour of buying Opel.