Right now, Toyota is the largest car company in the world. Following close behind are well-known names like Volkswagen, Hyundai, General Motors and more. Lately, though, there's been news of a new name that will soon take the fourth spot on that list — a car company known only as 'Stellantis', whose name is Latin for "to brighten with stars".
Don't worry if you've never seen a Stellantis car on the road. That's because it's a new corporate name, and because Stellantis itself doesn't produce any cars. Instead, Stellantis is going to be the result of a merger between two other groups of car companies: Fiat-Chrysler Automobiles (FCA) and the Peugeot Group (PSA).
FCA and PSA Merger
Firstly, let's take a closer look at both groups of companies. FCA, as the name suggests, consists of carmakers Fiat and Chrysler. It also includes other popular car brands like Jeep, Dodge, Ram, Lancia, Maserati, and Alfa Romeo.
PSA, on the other hand, consists of DS, Opel, Vauxhall, Citroen, and of course, Peugeot itself.
Individually, each company is powerful on its own. So, what do they benefit from merging?
The Reason for the Merger
The merger is a 50:50 deal between FCA and PSA. That means that both groups have an equal share of Stellantis. This $50 billion agreement aims to leverage FCA and PSA's combined scale across the world. On top of that, the two groups seek to develop newer technologies together to keep up with more stringent environmental regulations. The merger has been in the works since 2019 and will be completed sometime in 2021.
On their own, each group of companies already shows just how consolidated the carmaking industry has become. That consolidation will be even more serious as the two groups come together under one umbrella—Stellantis.
The increased consolidation between both groups will give them so much power over the automotive market that even the European Commission is investigating the merger. The main concern here is that there may be potential violations of antitrust laws, i.e. laws that exist to prevent monopolies, maintain fair competition, and protect car buyers.
The European Commission's Investigation into Stellantis
The merger between FCA and PSA will result in Stellantis being the fourth largest car company in the world. The European Commission (EC), which is the executive arm of the European Union (EU), is investigating Stellantis to see if it violates antitrust laws.
More specifically, the EC's investigation is trying to figure out if Stellantis would be a threat to the small commercial vans segment of the automotive market.
The investigations are ongoing and should be completed by October 2020.
Fiat-Chrysler is no stranger to scandals. Recently, authorities in Switzerland, Italy, and Germany raided their offices as part of a separate investigation. German prosecutors are investigating the company because of the engine management software used by Fiat, Jeep, and Alpha Romeo vehicles. Authorities suspect that the company may be using that software unfairly to evade emissions detecting devices.
This sort of story is not new at all. In 2015, the Volkswagen Group confessed to doing precisely that: using software to cheat on emissions tests.
The World is Watching Stellantis
Whatever happens in the story of Stellantis, there is no doubt that the whole world will be watching. Hopefully, the merger means that drivers will be able to buy much more efficient vehicles soon.
For company leaders involved in the alliance, however, it means that there's a bright spotlight aimed on all of them. For this reason, it will be much tougher to side-step any bad press.
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By Ray Hasbollah