Last month, Groupe PSA — the French manufacturer of the likes of Peugeot and Citroën — and Fiat Chrysler Automobiles (FCA) announced a binding agreement to merge. Lauded by FCA CEO Mike Manley as “smart industry consolidation,” this move hopes to achieve brand diversity and new efficiencies. Given the pressure that tech companies are beginning to place on the traditional auto industry, a merger is one way for these companies to expand their capabilities. “[It] takes lots of capital and lots of expertise and access to technical talent,” to compete with the tech sector, says PVMI director John Paul MacDuffie.
In an interview with Knowledge@Wharton, MacDuffie reserves judgment on the wisdom of the move, noting that many other automakers are taking a more cautious approach through alliances instead of mergers. Time will tell whether this particular merger is a smart one. “I’d want to see if there are things [the combined PSA-FCA entity is] doing that do in fact accelerate this company into being in a good position for the future,” says MacDuffie.