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Fiat wants to merge with PSA

15th of April 2010

Of course you all heard about the Renault-Nissan / Daimler alliance that was announced last week. Now it seems that another important move on the auto market in the close future.

I am talking about the statement that Sergio Marchionne, the head of the Fiat Group and the Chrysler Group, gave to the media present in Rome a couple of days ago. He said that ``The next merger will probably be French``. He continued by saying that ``They [PSA] tried with Mitsubishi and they will try with someone else``.

To be honest, he did not specifically say that the Fiat Group is interested in a merger with PSA Peugeot Citroen, but the above mentioned statement combines with another one made by the CEO of Fiat and Chrysler. More precisely, Sergio Marchionne said some time ago that ``Partnering up with Europe`s second largest manufacturer would be a marriage in heaven`` and that ``In order to survive globally, international manufacturers need to build at least 5 million cars``.

Now let`s analyze the situation. Last year, Fiat and Chrysler built together a total of about 3.3 million cars (2 million cars by Fiat and 1.3 million cars by Chrysler). If we add up to this sum the 3.2 million cars built last year by PSA Peugeot Citroen, we will see that the five million minimum believed by Marchionne would be well fulfilled.

A merger would benefit PSA Peugeot Citroen too, as in a world where everyone seems to be joining forces for survival, they are looking to share development, production costs and parts.

This kind of a deal would make a lot of sense and would ensure a bright future for these companies in particular and the entire car business in general.

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