Fiat-Chrysler recently accepted a merger with French auto manufacturer Peugeot SA (PSA) on January 4th. The merger has come as a result of plummeting sales and a necessity for both carmakers to survive the harsh car market. The companies will combine to form a new entity called Stellantis.

   While PSA does not market its vehicles in the US, Fiat Chrysler (FCA) is responsible for some of the most popular car name brands on the US and global markets. Names like Jeep, Chrysler, Dodge, and Fiat are all under the umbrella of FCA, as well as many familiar performance cars like Ferrari, Alfa Romeo, and Maserati. PSA is home to brands including Peugeot, Citroen, and Opel. Alone, both companies are some of the largest automakers in the world. FCA sold 1.8 million cars in 2020 and PSA sold 2.2 million.

   The merger came as a result of multiple factors. Both PSA and FCA are lagging behind the trend in electric vehicles, and the hope is that this merger will help put them on par with the rest of the industry. 

   Both FCA and PSA have experienced sharp declines in sales recently, especially in wake of COVID-19. US sales for FCA dropped 17 percent in 2020 and a massive 53 percent for the Fiat brand. In November, PSA sales were down 30 percent year to date. FCA was hit especially hard in the commercial sector of their business. A significant portion of sales encompass vans for delivery services like Amazon and vehicles for car renters like Hertz. 

   After the merger is finalized, Stellantis will sit at number four behind Toyota, Volkswagen, and Renault-Nissan-Mitsubishi for the largest carmaker. Stellantis will employ over 400,000 people worldwide and plans to optimize production are in the works. FCA and PSA have encountered problems with production like overcapacity,  but there are no plans to shut down any plants.

   This could be the beginning of a series of mergers taking place in the car market. FCA has already backed out of merger talks with the Renault alliance, and many other carmakers are huddling together in the harsh car market. Jaguar-Land Rover may soon join Stellantis to further develop its performance car sector.