[Supplied photo]

TOKYO - Fiat Chrysler Automobiles N.V. and French automaker PSA Group, which manufactures vehicles under the Peugeot and Citroen brands, said Thursday they plan to merge to create the world's fourth-largest automobile maker by volume.

The new group will be equally owned by the two companies. FCA has strength in the North American and Latin American markets, while PSA has a significant presence in Europe.

The combined group would be led by PSA Chairman of the Managing Board Carlos Tavares as CEO for an initial term of five years, while the 11-member board would be composed of five board members nominated by each group in addition to Tavares, the companies said.

The two sides are expected to hold talks to sign a binding memorandum in coming weeks, they said.

The combined sales of the automakers exceeded 8.7 million units in 2018, meaning the new group would place after Volkswagen AG, the alliance of Nissan Motor Co., Renault SA and Mitsubishi Motors Corp., and the Toyota Motor Corp. group.

The move comes after FCA said in June that it had dropped an offer to merge with Renault, a French rival of PSA, apparently due to the intervention of the French government, a major Renault shareholder, and FCA's failure to win the backing of Nissan.

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