Earlier this year, FCA and Renault very nearly merged, right up until an 11th hour call by FCA to back out of the deal. In simple terms, FCA was not thrilled with the idea of the French government’s 15 percent stake in Renault, blaming the government and “political conditions in France” for the deal not going through. What wasn’t mentioned (out loud, at least) were the issues that were plaguing Renault’s alliance buddy, Nissan, who was in the middle of problems of their own with former CEO Carlos Ghosn. At the end of it all FCA said it was moving forward with independent work and that was that.

Up until the last couple of days, anyways. First there were the rumors that FCA and Peugeot (PSA) were in discussions about a merger. This wasn’t a big surprise…prior to the Renault deal, FCA had held discussions with PSA. Then FCA made a formal announcement that they were in discussions, and late last night word came out that the board of Groupe PSA has green-lit negotiations with FCA.

Why Peugeot? There is brand history there…Peugeot had purchased Chrysler Europe from Chrysler Corporation in 1978, acquiring a myriad of nameplates that included Simca, Rootes, Hillman, Humber, and Sunbeam. Peugeot has also been on a tear over the last few years…they acquired Opel and Vauxhall Motors from GM in 2017, the Ambassador brand from Hindustan Motors in India the same year, and gained a majority stake in Aixam last year. Peugeot is in a joint-venture setup with Dongfeng Motor Corporation in China and has been since 1992, as well as other joint ventures with Toyota, Chang’an, and Iran Khodro. Peugeot has an established range of electric vehicles and smaller cars, something FCA has struggled with since the death of the Dodge Neon, and they have a broad range of markets that would suddenly be opened up.

Are there downfalls? The French government holds a 12-percent stake in PSA, but they aren’t the only ones. Dongfeng Motor has a percentage, which means the Chinese government is involved, and the Peugeot family have a stake as well. Combine that with the Agnelli family that controls Fiat, and the situation could get messy in a hurry…and that’s before you get into the current political climate of tarriffs, production origin issues, and constant threats to corporations that leaves everyone wondering if sales can be made or if taxes are going to kill any kind of business promise.