After a long journey, Fiat Chrysler and PSA will seal the merger to become Stellantis

MILAN (Reuters) – Fiat Chrysler and PSA will seal their long-awaited merger on Saturday to create Stellantis, the world’s fourth-largest automotive group with enough pockets to fund the switch to electric driving and take on bigger rivals Toyota and Volkswagen.

It took more than a year for Italian-American and French automakers to finalize the $ 52 billion deal, during which the global economy was disrupted by the COVID-19 pandemic. They first announced their intention to merge in October 2019, to create a group with annual sales of around 8.1 million vehicles.

Shares of Stellantis, which will be led by current PSA CEO Carlos Tavares, will start trading in Milan and Paris on Monday and in New York on Tuesday.

Now analysts and investors are focused on how Tavares plans to address the enormous challenges the group faces – from excess production capacity to dismal performance in China.

Tavares will hold his first press conference as CEO of Stellantis on Tuesday, after ringing the NYSE bell with President John Elkann.

FCA and PSA have said Stellantis can cut its annual costs by more than 5 billion euros ($ 6.1 billion) without plant closings, and investors would like more details on how it will do so.

Marco Santino, partner at consultants Oliver Wyman, said he expected Tavares to disclose the outlines of his action plan soon, but without disclosing too many details at first.

“He’s turned out to be the type of person who prefers action over words, so I don’t think he’ll make any loud statements or try to over-sell goals,” he said.

Like all global automakers, Stellantis must invest billions in the coming years to transform its vehicle lineup for the electric age.

But other urgent tasks are looming, including reviving the group’s belated fortune in China, streamlining its huge global empire, and resolving massive overcapacity.

“It will be a step by step process, also to allow the market to better appreciate each movement. I don’t think we’ll have all the details for a year, ”Santino said.

FCA CEO Mike Manley – who will lead Stellantis’ core North American operations – said 40% of the automaker’s expected synergies would come from converging platforms and powertrains and leveraging investments in R&D, 35% savings on purchasing and an additional 7% savings on business operations and overheads.

(1 USD = 0.8226 euros)