Fiat Chrysler confirms talks with Vauxhall and Peugeot owner PSA Group

Fiat Chrysler confirms talks with Vauxhall and Peugeot owner PSA Group

Italian-American firm Fiat Chrysler Automobiles has confirmed that it is in talks with the French owner of Vauxhall and Peugeot over a tie-up to create one of the world’s biggest car makers.

The discussions with PSA Group mark Fiat Chrysler’s second attempt this year to reshape the global car industry as it faces huge challenges with the transition to electric and autonomous vehicles.

A statement said the talks were ongoing “aimed at creating one of the world’s leading mobility groups”, but did not specify whether the goal was a full merger with the Peugeot manufacturer PSA or a looser alliance.

But there were fears over the impact of a deal on British workers at Vauxhall’s factory in Ellesmere Port, Cheshire.

Trade union Unite said it was seeking urgent meetings with PSA management.

Unite national officer Des Quinn said: “Merger talks combined with Brexit uncertainty is deeply unsettling for Vauxhall’s UK workforce, which is one of the most efficient in Europe.

“The fact remains, merger or not, if PSA wants to use a great British brand like Vauxhall to sell cars and vans in the UK, then it has to make them here in the UK.”

Fiat Chrysler has long been looking for a partner to help shoulder investments in the capital-heavy industry, under the outlook that failure to consolidate will inevitably lead some companies to fail.

Talks this year with another French car maker, Renault, failed over French government concerns over the role of the Japanese partner Nissan.

Fiat Chrysler Automobiles was formed in 2014 out of a merger of Italian car maker Fiat and the American company Chrysler, which Fiat brought back from the brink of bankruptcy.

Shares in Fiat Chrysler shot up nearly 9% on the news to 12.75 euros (£11) in Milan trading.

Like Renault, Peugeot maker PSA is partly owned by the French government, which will prioritise protecting jobs in French plants.

Peugeot family group, China’s Dongfeng Motors, and French state investment bank BPI France each have 12.23% of capital and 19.5% voting rights.

Fiat Chrysler is controlled by the Fiat-founding Agnelli family, represented by chairman John Elkann who spearheaded the Renault talks. His role in these talks has not been disclosed.

The firm has a larger global footprint than PSA, whose focus is on Europe where it is the second-largest car maker.

Fiat Chrysler last year sold 5.8 million cars globally but it makes the lion’s share of its profits in the United States, and has been struggling in Asia and Europe. PSA sold 3.9 million cars last year.

Fiat Chrysler is making a concerted push into electric and hybrid vehicles, where it has lagged, focusing in particular on its premium brands Alfa Romeo and Maserati.

PSA has performed a remarkable turnaround in recent years, going from one of the industry’s least-healthy car companies to one of its most powerful. That is thanks in large part to an unusual £3.1 billion bailout in 2014 in which Dongfeng and the French state gained equal shares to the family that founded Peugeot 200 years ago.

In 2017, PSA bought General Motors’ Opel and Vauxhall brands for 2.33 billion dollars (£1.81 billion), making it Europe’s second-largest car maker after Volkswagen.

PSA is now planning to reintroduce Peugeot cars to North American markets as part of a plan which includes a car-sharing service introduced in Washington last year.

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