After failing to negotiate with Renault Group, Fiat Chrysler negotiates with PSA Group for a merger.

[[MC]Ronin[MC]]

After failing to negotiate with Renault Group, Fiat Chrysler negotiates with PSA Group for a merger.

Fiat Chrysler Automobiles FCA and PSA Group have confirmed that they are negotiating a merger that could lead to the formation of the fourth largest car concern.

These negotiations come against the backdrop of the world's leading manufacturers' experience in restructuring their businesses as costs rise and global sales decline.

Confirmation from the two concerns came after The Wall Street Journal first reported it. But none of them gave more details.

It is recalled that the FCA was negotiating the same with the Renault Group, but then politics took a peak and this alliance could not materialize. It is also very likely that politics will now place a heavy burden on these processes.

At this point, at least according to a source in The Wall Street Journal, PSA and Fiat Chrysler are discussing a full merger with an equal distribution of shares between the two parties. If that happens, Peugeot chief Carlos Tavares will head the new Alliance as CEO, while John Elkan, the big man in the Italian-American concern, will take over as chairman.

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It is recalled that the FCA had drilling earlier this year for a possible merger with Peugeot, which was again reported by The Wall Street Journal. But Elkan believed that a deal with Renault would provide more synergies and better geographical coverage. As it was understood, it was not possible.

Meanwhile, tensions with John Elcan are mounting. Exor NV, the holding company through which the Aneli family holds a 29% stake in Fiat Chrysler, also runs the company. The company in question has pursued a diversification policy in recent years to reduce its dependence on the FCA. Exor bought the insurance company in 2015, owning 23% of Ferrari's holdings.

According to a source, last Wednesday, Exor convened a meeting of the board of directors. There was such a meeting on the same day at the PSA near Paris.

We are still far from a possible deal. Peugeot and Fiat Chrysler are major players in Europe, and a merger between them can face serious regulatory difficulties.

At the same time, Chinese and French shareholdings in Peugeot are likely to attract the attention of US authorities, where the Committee on Foreign Investment would have serious objections to a possible merger between Chinese and US assets. We know that the Trump administration is waging a trade war with China, but on the other hand, Dongfeng Motor Group Co. has only a 12.2% stake in the French manufacturer.

If this merger takes place, it will form the fourth largest automobile concern. Last year, the two companies sold a total of 8.7 million vehicles and General Motors 8.4 million.

There is quite a difference to the forehead. Volkswagen AG sold 10.8 million vehicles, nearly as much as Renault, Nissan and Mitsubishi Motors Co. sold, and Toyota Motor Corp. reached 10.6 million