Most of have a vehicle or access to a vehicle and we know a little about the auto industry. Some of us have the vehicle we drive and the one we wish we could, if money was no object. If your brands were Fiat, Chrysler, Jeep, Dodge, Peugeot, Opel then they will be owned by the same company. In an article by Eric Atkins of Reuters, Fiat Chrysler and PSA (formerly known as Peugeot) will be merging in an all stock merger.
The results will be the 4th largest auto maker and the hope is the company can save $ 4 billion on costs. 40% of the savings would be achieved by sharing vehicle structures and powertrains; 40% will come from purchasing efficiencies. The rest will come from marketing, information technology, and logistics.
At the moment, the company has said no job losses, but there will be plant excesses for the combined companies sold 8.7 million vehicles but has the capacity to produce 14 million vehicles. A focus of the company will be develop cleaner vehicles to sell to Europe and China. At the moment, Carlos Tavares the CEO of PSA and soon to be the CEO of Fiat Chrysler PSA said the brands will stay in their countries of origin – Italian brands in Italy, French brands in France, American brands in the US and German brands in Germany.
Linking to dividend paying stocks, all companies can and do go through mergers and acquisitions, when they do you have to ask why did the company make the decision and for you was it a good one. If the answer is yes it is good, then you can hold or you can see if the company achieves the efficiencies it says it will do. If they do not, then looking for alternatives is a good thing.
There are more questions than answers, till the next time – to raising questions.