Editor’s note: The following is a transcript of the accompanying video. ©2019 Thomson Reuters
It is a deal that will reshape the global car industry. Fiat Chrysler and Peugeot owner PSA have reached a binding agreement over a $50 billion merger. That will create the world’s fourth-largest automaker.
It’s intended to help them cope with slowing demand and the cost of developing electric and driverless vehicles. With agreement in place, the pair now start work on how to cut costs. The goal is to save over $4 billion a year, without closing any factories.
Together the two firms made 8.7 million cars last year. But industry watchers estimate they have the capacity to make 14 million.
Neither has spelled out how they will tackle the excess capacity, and labour unions are watching like hawks. Analysts expect a lot of horse trading over which units can be closed and which technologies the new firm will embrace.
Now the deal is expected to close over the next 12 to 15 months. One other task on the to-do list though: thinking up a name for the new entity.