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PSA Group and FCA have announced plans to merge, in a deal they say would create the world's fourth largest car manufacturer.
PSA Group is the owner of brands including Peugeot, Citroen, DS and Vauxhall, while FCA brands include Fiat, Alfa Romeo, Jeep and Maserati.
The firms say their boards have unanimously agreed to work towards a full combination of their businesses in a 50/50 merger.
By joining forces, the firms say they could achieve around £3.2 million a year in synergy savings, through a more efficient allocation of resources for investments in vehicle platforms, powertrains and technology, and from enhanced purchasing capability due to the combined group's new scale.
The firms say the synergy estimates are not based on any plant closures.
PSA CEO and chairman Carlos Tavares is set to become CEO of the newly-combined company, while FCA chairman John Elkann is set to become its chairman.
Tavares said: "This convergence brings significant value to all the stakeholders and opens a bright future for the combined entity.
"I'm pleased with the work already done with [FCA CEO] Mike Manley and will be very happy to work with him to build a great company together."
Manley said: "I'm delighted by the opportunity to work with Carlos and his team on this potentially industry-changing combination.
"We have a long history of successful cooperation with PSA Group and I am convinced that together with our great people we can create a world class global mobility company."
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