File photo/Zhang Jian (NBD)

Fiat Chrysler Automobiles N.V. (FCA) and Peugeot S.A. (PSA) have reached a binding agreement on a merger that will create the fourth largest global automotive manufacturer by volume and the third largest by revenue, the two carmakers said in a joint statement on Wednesday.

"The proposed combination will be an industry leader with the management, capabilities, resources and scale to successfully capitalize on the opportunities presented by the new era in sustainable mobility," the statement said.

Based on 2018 results for each of the two merging partners, the new company will have capacity to sell an estimated 8.7 million vehicles a year with revenue of nearly 170 billion euros, of which 46 percent deriving from the European market and 43 percent from North America, according to the statement.

"Our merger is a huge opportunity to take a stronger position in the auto industry as we seek to master the transition to a world of clean, safe and sustainable mobility and to provide our customers with world-class products, technology and services," said PSA Chairman Carlos Tavares.

FCA CEO Mike Manley added that "this is a union of two companies with incredible brands and a skilled and dedicated workforce. Both have faced the toughest of times and have emerged as agile, smart, formidable competitors."

FCA was founded in 2014 as a result of a merger between historic Italian carmaker Fiat and American automaker Chrysler.

FCA employs nearly 200,000 people around the globe. PSA employs 210,000 people, according to the statement.

Email: gaohan@nbd.com.cn