Future of auto finance in focus as Fiat Chrysler Automobiles and Groupe PSA negotiate merger

A new Dutch parent company will be created, along with an 11-member board, with five executives from FCA, including John Elkann as chairman, and five from Groupe PSA, including the senior independent director and the vice-chairman.

PSA’s chief executive officer Carlos Tavares (pictured), who would become chief executive officer of the newly-merged business for a minimum term of five years, said: “This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity. I’m pleased with the work already done.”

Mike Manley, who took over as chief executive officer of Fiat Chrysler Automobiles last year when Sergio Marchionne stepped down for health reasons, said: “I’m delighted by the opportunity to work with Carlos and his team on this potentially industry-changing combination. We have a long history of successful cooperation with Groupe PSA and I am convinced that together with our great people we can create a world class global mobility company.”

The new group’s Dutch parent company would be listed on Euronext (Paris), the Borsa Italiana (Milan) and the New York Stock Exchange and would continue to maintain “significant presences” in its current operating head office locations in France, Italy and the US.

The two groups have already invested heavily in projects to support the transition to an ACES-based transport system.

For example, PSA Group’s mobility services arm Free2Move is building a global presence, while PSA Finance has implemented car subscription offers through Drover and Wagonex.

This year, Fiat Chrysler Automobiles launched a new in-vehicle commerce platform through which customers can order and pay for fuel or food and book reservations.

The platform is initially deploying in the US during the second half of 2019 via an over-the-air update for its connected cars, covering model-year 2019 and 2020 Chrysler, Dodge, Jeep and Ram brand vehicles equipped with 8.4-inch touchscreens, while all new touchscreen-equipped models will feature the service in a global roll-out. FCA expects all its vehicles to be connected by 2022.

Earlier this year, Fiat Chrysler Automobiles trialled two forms of car-sharing services for owners of Jeeps. The first, with start-up Turo, focused on peer-to-peer sharing, and a second subscription service with Avis let owners swap their Jeeps for other vehicles for short periods.

It has also partnered with autonomous vehicle specialist Waymo, with an agreement to add up to 62,000 Chrysler Pacifica hybrid minivans to Waymo’s self-driving fleet.
In addition to a wealth of ACES initiatives, the companies have a wide range of auto finance arrangements, including Fiat Chrysler Automobile’s partnership with Santander Consumer USA, which was updated this year.

In 2018, LeasePlan became the operational lease partner to Fiat Chrysler Automobiles in several European markets where FCA’s captive finance arm does not have a presence, covering Austria, Czech Republic, Denmark, Finland, Greece, Hungary, Norway, Poland, Portugal, Slovakia, Sweden and Switzerland.

The manufacturer’s banking arm, FCA Bank, operates Leasys, a joint venture between Fiat Chrysler Automobiles and Crédit Agricole that started in September 2001 and currently manages a fleet of more than 215,000 units in Italy and six other European markets.

In addition to Free2Move, Groupe PSA acquired Opel/Vauxhall last year which includes Opel Vauxhall Finance, run in partnership with BNP Paribas and trading under brands including Opel Bank, Opel Financial Services and Vauxhall Finance.

The captive finance arm is currently implementing a plan to extend its finance to one-third of vehicles sold while extending its full-service leasing offer to new markets.

It also plans to widen availability of mobility packages that combine leasing, insurance and service products. 

Groupe PSA also launched a new auto leasing joint venture in China with DongFeng Motor Group last year.

Future details of the shape of its auto finance arrangements are expected to be revealed in 2020, once the merger has been formally agreed.

Earlier this year, FCA withdrew its proposal for a merger with Groupe PSA’s main rival Renault after the French government, Renault’s largest shareholder, refused to support the deal.

Source: Jato/Annual reports