FCAU - Fiat Chrysler Automobiles

[DTEJD1997]

hey all:

 

Reads to me like it is a 1 time dividend FROM THE PROFITS OF 2018?

 

"The distribution from the profits shown in the 2018 Company’s Annual Accounts will be subject to the approval by the Annual General Meeting of Shareholders which is scheduled to be held on April 12, 2019."

 

So could this be dividend for all of 2018?  Then there is a special dividend from the sale of Magnetti-Marelli?  Then after that regular quarterly dividends of about 20% of profit?

[Parsad]

hey all:

 

Reads to me like it is a 1 time dividend FROM THE PROFITS OF 2018?

 

"The distribution from the profits shown in the 2018 Company’s Annual Accounts will be subject to the approval by the Annual General Meeting of Shareholders which is scheduled to be held on April 12, 2019."

 

So could this be dividend for all of 2018?  Then there is a special dividend from the sale of Magnetti-Marelli?  Then after that regular quarterly dividends of about 20% of profit?

 

I'm pretty sure it's the 20% from this year's $3.2B Euro adjusted net profits which amounts to about $0.65 Euro...which is what they are paying.  One-time annual dividend.  They will do the $2B Euro Magnetti special dividend when the deal closes in the 2nd quarter of 2019. 

 

So essentially, you're getting almost a 15% dividend return (5% annual dividend plus 10% special dividend) in the next 3-4 months.  Can't understand why the stock is anywhere near where it is...should be at the very least around $21-25/share on the 5% annual dividend.  Cheers!

[TwoCitiesCapital]

Agreed. Many European companies pay once a year - we shouldn't expect FCAU to be different.

 

Special div to come. This is the annual divvy.

[fareastwarriors]

SUVs Are Hotter Than Ever, But Jeep May Be Building Too Many Wranglers

 

https://www.bloomberg.com/news/articles/2019-02-26/jeep-wranglers-pile-up-on-dealer-lots-in-risk-signal-for-detroit

[Sportgamma]

“We are entering a period where chaos is going to make competition extremely selective,” PSA Group Chief Executive Officer Carlos Tavares said in Geneva. “This perhaps changes the way our companies are operating and it could also raise opportunities for deals eventually.”

 

https://www.thestar.com/business/technology/2019/03/07/auto-industry-disruption-is-here-with-shakeup-starting-in-geneva.html

[DTEJD1997]

Hey all:

 

Apparently trading in FCAU was briefly suspended this AM on news that the Peugot family would be interested in acquiring Fiat.

 

Sounds good to me.  Sell off Fiat, pay another special dividend.  Keep a few billion in the bank, and focus on Chrysler, Jeep, Alfa-Romeo and Maserati.

 

Any thoughts?

[kh812000]

https://www.lesechos.fr/industrie-services/automobile/0600917332724-les-peugeot-prets-a-soutenir-une-offensive-de-psa-2253524.php

 

 

When the journalist says PSA and FCA are discussing at the highest level their association in commercial vehicles - and others partnerships,

Robert Peugeot replies that with them, as with others, the planets could be aligned.  He adds that the group has €600M available immediately.

 

 

[Spekulatius]

Hey all:

 

Apparently trading in FCAU was briefly suspended this AM on news that the Peugot family would be interested in acquiring Fiat.

 

Sounds good to me.  Sell off Fiat, pay another special dividend.  Keep a few billion in the bank, and focus on Chrysler, Jeep, Alfa-Romeo and Maserati.

 

Any thoughts?

 

Fiat is a dog with flees. I think a tie up with Peugeot makes a lot of sense and would be a huge positive. I don’t think it would fetch a lot of cash, probably just a stake in the combined company.

[TwoCitiesCapital]

Hey all:

 

Apparently trading in FCAU was briefly suspended this AM on news that the Peugot family would be interested in acquiring Fiat.

 

Sounds good to me.  Sell off Fiat, pay another special dividend.  Keep a few billion in the bank, and focus on Chrysler, Jeep, Alfa-Romeo and Maserati.

 

Any thoughts?

 

Is that what's intended though? It's my understanding that it makes sense for Peugot because of the diversification in geographical exposure. I think it's doubtful they'd just take Fiat and leave the American brands behind as that doesn't achieve the goal.

[Parsad]

Hey all:

 

Apparently trading in FCAU was briefly suspended this AM on news that the Peugot family would be interested in acquiring Fiat.

 

Sounds good to me.  Sell off Fiat, pay another special dividend.  Keep a few billion in the bank, and focus on Chrysler, Jeep, Alfa-Romeo and Maserati.

 

Any thoughts?

 

Is that what's intended though? It's my understanding that it makes sense for Peugot because of the diversification in geographical exposure. I think it's doubtful they'd just take Fiat and leave the American brands behind as that doesn't achieve the goal.

 

They would ideally be looking for a merger, but adding complementary pieces would be fine too...as long as the deal works.  Cheers!

[Gray Fox]

PSA wants a merger with ALL of FCAU.  Europe is a structurally worse market for autos than North America.  Way more restrictive labor rules, fuel standards, and less demand for higher margin SUVs/pick up trucks.  Fiat's fleet business is slightly profitable and their regular Fiat business loses a little money.  Combined it does 1.4mm units, the vast majority of which are in Europe.  PSA could buy this and synergies might be 1%-1.5% of sales. 

 

Getting Fiat off the main entity essentially means losing very little profits, a significant amount of CapEx, the most troublesome unions/governments, and puts Jeep/Ram in focus.  It also makes it that much more likely they file GAAP financials.  If FCAU were in the index today, it would be a 10bps position in every index fund based on its market cap.  1.555mm shares, 1.1mm of which are free floating.  At current trading volumes it would take quite a long time for them to get a full position - it would provide a nonstop bid and could potentially close the valuation gap with F/GM.

 

There is parent level debt at Exor.  They are doing the dividends right now to delever Exor.  If they could actually sell the Fiat line to PSA it would be a home run.  PSA wants to do a deal with the whole company because they want to diversify away from Europe.  GM Europe was a far worse business and they essentially got it for free.  Is the FIat line at 1.4mm units worth a couple billion Euro? The synergies alone at PSAs current multiple imply that it is.

 

 

[Parsad]

PSA wants a merger with ALL of FCAU.  Europe is a structurally worse market for autos than North America.  Way more restrictive labor rules, fuel standards, and less demand for higher margin SUVs/pick up trucks.  Fiat's fleet business is slightly profitable and their regular Fiat business loses a little money.  Combined it does 1.4mm units, the vast majority of which are in Europe.  PSA could buy this and synergies might be 1%-1.5% of sales. 

 

Getting Fiat off the main entity essentially means losing very little profits, a significant amount of CapEx, the most troublesome unions/governments, and puts Jeep/Ram in focus.  It also makes it that much more likely they file GAAP financials.  If FCAU were in the index today, it would be a 10bps position in every index fund based on its market cap.  1.555mm shares, 1.1mm of which are free floating.  At current trading volumes it would take quite a long time for them to get a full position - it would provide a nonstop bid and could potentially close the valuation gap with F/GM.

 

There is parent level debt at Exor.  They are doing the dividends right now to delever Exor.  If they could actually sell the Fiat line to PSA it would be a home run.  PSA wants to do a deal with the whole company because they want to diversify away from Europe.  GM Europe was a far worse business and they essentially got it for free.  Is the FIat line at 1.4mm units worth a couple billion Euro? The synergies alone at PSAs current multiple imply that it is.

 

I agree with you on all counts.  I would also suggest that any interest (whether in part or whole) for FCAU, means that a competing offer could also come.  FCAU is probably one of the best smaller auto companies available for consolidation, especially with all of the cash, low debt and strong U.S. cash flows.  I was off on my timing about a deal getting done before December...but I wouldn't at all be surprised if something happens before July.  Cheers!

[Spekulatius]

PSA wants a merger with ALL of FCAU.  Europe is a structurally worse market for autos than North America.  Way more restrictive labor rules, fuel standards, and less demand for higher margin SUVs/pick up trucks.  Fiat's fleet business is slightly profitable and their regular Fiat business loses a little money.  Combined it does 1.4mm units, the vast majority of which are in Europe.  PSA could buy this and synergies might be 1%-1.5% of sales. 

 

Getting Fiat off the main entity essentially means losing very little profits, a significant amount of CapEx, the most troublesome unions/governments, and puts Jeep/Ram in focus.  It also makes it that much more likely they file GAAP financials.  If FCAU were in the index today, it would be a 10bps position in every index fund based on its market cap.  1.555mm shares, 1.1mm of which are free floating.  At current trading volumes it would take quite a long time for them to get a full position - it would provide a nonstop bid and could potentially close the valuation gap with F/GM.

 

There is parent level debt at Exor.  They are doing the dividends right now to delever Exor.  If they could actually sell the Fiat line to PSA it would be a home run.  PSA wants to do a deal with the whole company because they want to diversify away from Europe.  GM Europe was a far worse business and they essentially got it for free.  Is the FIat line at 1.4mm units worth a couple billion Euro? The synergies alone at PSAs current multiple imply that it is.

 

I agree with you on all counts.  I would also suggest that any interest (whether in part or whole) for FCAU, means that a competing offer could also come.  FCAU is probably one of the best smaller auto companies available for consolidation, especially with all of the cash, low debt and strong U.S. cash flows.  I was off on my timing about a deal getting done before December...but I wouldn't at all be surprised if something happens before July.  Cheers!

 

Can Peugeot even do a purchase of the whole company for cash? If it’s for shares then they probably sell off on style and the premium would be small, because Peugeot trades cheaply to begin with.

 

I would sort of like them to take the Fiat operation, even if they pay very little or zero, because I don’t think it’s worth anything. Machione could fix Chrysler, but he couldn’t fix Fiat in a 10 year economic recovery and Italy (Fiat strongest market) is falling into a recession and is unlikely to get any better.

[Parsad]

PSA wants a merger with ALL of FCAU.  Europe is a structurally worse market for autos than North America.  Way more restrictive labor rules, fuel standards, and less demand for higher margin SUVs/pick up trucks.  Fiat's fleet business is slightly profitable and their regular Fiat business loses a little money.  Combined it does 1.4mm units, the vast majority of which are in Europe.  PSA could buy this and synergies might be 1%-1.5% of sales. 

 

Getting Fiat off the main entity essentially means losing very little profits, a significant amount of CapEx, the most troublesome unions/governments, and puts Jeep/Ram in focus.  It also makes it that much more likely they file GAAP financials.  If FCAU were in the index today, it would be a 10bps position in every index fund based on its market cap.  1.555mm shares, 1.1mm of which are free floating.  At current trading volumes it would take quite a long time for them to get a full position - it would provide a nonstop bid and could potentially close the valuation gap with F/GM.

 

There is parent level debt at Exor.  They are doing the dividends right now to delever Exor.  If they could actually sell the Fiat line to PSA it would be a home run.  PSA wants to do a deal with the whole company because they want to diversify away from Europe.  GM Europe was a far worse business and they essentially got it for free.  Is the FIat line at 1.4mm units worth a couple billion Euro? The synergies alone at PSAs current multiple imply that it is.

 

I agree with you on all counts.  I would also suggest that any interest (whether in part or whole) for FCAU, means that a competing offer could also come.  FCAU is probably one of the best smaller auto companies available for consolidation, especially with all of the cash, low debt and strong U.S. cash flows.  I was off on my timing about a deal getting done before December...but I wouldn't at all be surprised if something happens before July.  Cheers!

 

Can Peugeot even do a purchase of the whole company for cash? If it’s for shares then they probably sell off on style and the premium would be small, because Peugeot trades cheaply to begin with.

 

I would sort of like them to take the Fiat operation, even if they pay very little or zero, because I don’t think it’s worth anything. Machione could fix Chrysler, but he couldn’t fix Fiat in a 10 year economic recovery and Italy (Fiat strongest market) is falling into a recession and is unlikely to get any better.

 

They could do a leveraged deal for the whole thing.  After you pay the one-time dividend, and the special dividend from Magnetti, there is still $4-5B left from the deal which was going into research and development.  FCAU is also sitting on a ton of cash.  So they could do a leveraged deal for cash after borrowing about $10-13B...I don't think a stock deal would get done or approved by Elkann unless there was like a 80-100% premium to the current price.  But they could probably do a leveraged cash deal for a 40-50% premium now.  Cheers!

[Gray Fox]

I have some $20 LEAPs ( in addition to $15/$17) at this point so I'm hoping its at least 35% or so premium...

[vpagano]

https://seekingalpha.com/news/3445165-fiat-chrysler-rebuffed-peugeot-merger-pitch-earlier-year-wsj

 

Peugeot (OTCPK:PEUGF +3%) approached Fiat Chrysler (FCAU -2.8%) earlier this year about combining the two automakers, but FCAU rebuffed the pitch, as it had previous approaches by the French firm, WSJ reports.

 

FCAU has said it is open to a big deal with another automaker if it fits the company’s objectives but its controlling family, the Agnellis of Italy, opposes any deal that would include accepting a large proportion of Peugeot stock, according to the report.

 

Peugeot is still digesting its acquisition of General Motors' European business.

[Parsad]

https://seekingalpha.com/news/3445165-fiat-chrysler-rebuffed-peugeot-merger-pitch-earlier-year-wsj

 

Peugeot (OTCPK:PEUGF +3%) approached Fiat Chrysler (FCAU -2.8%) earlier this year about combining the two automakers, but FCAU rebuffed the pitch, as it had previous approaches by the French firm, WSJ reports.

 

FCAU has said it is open to a big deal with another automaker if it fits the company’s objectives but its controlling family, the Agnellis of Italy, opposes any deal that would include accepting a large proportion of Peugeot stock, according to the report.

 

Peugeot is still digesting its acquisition of General Motors' European business.

 

Yeah, that's what I thought.  I'm intrigued even by the fact they said that they wouldn't accept a deal with a "large" proportion of Peugeot stock.  They could do a leveraged buyout without much difficulty if they accepted 10-20% in stock and the rest cash. 

 

A deal with FCAU would be good for Peugeot, but FCAU could fit in with a number of other companies quite nicely...especially the Chinese!  Not sure why they aren't making a concerted run at FCAU.  Also, instead of selling Jaguar and Land Rover, Tata should do the leveraged takeover of FCAU and retain Jaguar and Landrover.  With Maserati and Alfa Romeo, plus all of the cash and cash flow coming in from Jeep and Ram, they could easily support their luxury brands and have a strong footprint in North America.

 

And of course GM...what is stopping them from making a deal with FCAU and taking a big chunk of the U.S. auto business.  It might be tough to get through anti-competition reviews, but the U.S. needs to accept that they really need to go to a single U.S. automaker to compete globally with Volkswagen, a possible future combination of Daimler & BMW, Hyundai/Kia and a future super-competitor from China.  Cheers!

[merkhet]

https://seekingalpha.com/news/3445165-fiat-chrysler-rebuffed-peugeot-merger-pitch-earlier-year-wsj

 

Peugeot (OTCPK:PEUGF +3%) approached Fiat Chrysler (FCAU -2.8%) earlier this year about combining the two automakers, but FCAU rebuffed the pitch, as it had previous approaches by the French firm, WSJ reports.

 

FCAU has said it is open to a big deal with another automaker if it fits the company’s objectives but its controlling family, the Agnellis of Italy, opposes any deal that would include accepting a large proportion of Peugeot stock, according to the report.

 

Peugeot is still digesting its acquisition of General Motors' European business.

 

Yeah, that's what I thought.  I'm intrigued even by the fact they said that they wouldn't accept a deal with a "large" proportion of Peugeot stock.  They could do a leveraged buyout without much difficulty if they accepted 10-20% in stock and the rest cash. 

 

A deal with FCAU would be good for Peugeot, but FCAU could fit in with a number of other companies quite nicely...especially the Chinese!  Not sure why they aren't making a concerted run at FCAU.  Also, instead of selling Jaguar and Land Rover, Tata should do the leveraged takeover of FCAU and retain Jaguar and Landrover.  With Maserati and Alfa Romeo, plus all of the cash and cash flow coming in from Jeep and Ram, they could easily support their luxury brands and have a strong footprint in North America.

 

And of course GM...what is stopping them from making a deal with FCAU and taking a big chunk of the U.S. auto business.  It might be tough to get through anti-competition reviews, but the U.S. needs to accept that they really need to go to a single U.S. automaker to compete globally with Volkswagen, a possible future combination of Daimler & BMW, Hyundai/Kia and a future super-competitor from China.  Cheers!

 

Would that get approved given the current trade tensions?

[Parsad]

https://seekingalpha.com/news/3445165-fiat-chrysler-rebuffed-peugeot-merger-pitch-earlier-year-wsj

 

Peugeot (OTCPK:PEUGF +3%) approached Fiat Chrysler (FCAU -2.8%) earlier this year about combining the two automakers, but FCAU rebuffed the pitch, as it had previous approaches by the French firm, WSJ reports.

 

FCAU has said it is open to a big deal with another automaker if it fits the company’s objectives but its controlling family, the Agnellis of Italy, opposes any deal that would include accepting a large proportion of Peugeot stock, according to the report.

 

Peugeot is still digesting its acquisition of General Motors' European business.

 

Yeah, that's what I thought.  I'm intrigued even by the fact they said that they wouldn't accept a deal with a "large" proportion of Peugeot stock.  They could do a leveraged buyout without much difficulty if they accepted 10-20% in stock and the rest cash. 

 

A deal with FCAU would be good for Peugeot, but FCAU could fit in with a number of other companies quite nicely...especially the Chinese!  Not sure why they aren't making a concerted run at FCAU.  Also, instead of selling Jaguar and Land Rover, Tata should do the leveraged takeover of FCAU and retain Jaguar and Landrover.  With Maserati and Alfa Romeo, plus all of the cash and cash flow coming in from Jeep and Ram, they could easily support their luxury brands and have a strong footprint in North America.

 

And of course GM...what is stopping them from making a deal with FCAU and taking a big chunk of the U.S. auto business.  It might be tough to get through anti-competition reviews, but the U.S. needs to accept that they really need to go to a single U.S. automaker to compete globally with Volkswagen, a possible future combination of Daimler & BMW, Hyundai/Kia and a future super-competitor from China.  Cheers!

 

Would that get approved given the current trade tensions?

 

I think it would.  FCAU is a European company, not US.  Justice Department may argue, but it would be hard pressed for courts to find it anti-competitive or a security risk.  Cheers!

[Spekulatius]

I think it would.  FCAU is a European company, not US.  Justice Department may argue, but it would be hard pressed for courts to find it anti-competitive or a security risk.  Cheers!

 

I doubt that a takeover of Fiat in Europe by the Chinese would go through, much less atakeover of Chrysler. The US government found a security risk with Canada and Europe supplying steel to the US so one can be sure that they would find a risk with a Chinese company buying a US car company.

 

The problem with the car industry is that the pool of buyers is quite limited. I doubt that a GM Vhrysler combination would go though - maybe Ford Chrysler, if Ford gets into trouble, but if they do, how would they pay for Chrysler and Chrysler buying Ford defies the whole agenda of getting out of the car business for the Agnelli’s.

[cmlber]

I doubt that a GM Vhrysler combination would go though

 

Do you think Sergio would've tried so hard to get a deal done with GM if he didn't think there was a reasonable probability of a deal going through?  And he was probably a little bit more connected to the decision makers than we are...  And that was before Trump.  Consumers would benefit from auto consolidation.  The industry spends well over $2 billion a week on product development, which is probably half duplicative.  That gets passed on to consumers in the form of higher prices.  This isn't a high margin business with the exception of pickup trucks.  I think there would be zero problem getting a merger of GM + FCAU approved if FCAU spun-off Ram, which would be a pretty decent worst case regulatory scenario...  And a decent chance you could convince the Trump administration that they want America to dominate the auto business.

 

[Parsad]

I think it would.  FCAU is a European company, not US.  Justice Department may argue, but it would be hard pressed for courts to find it anti-competitive or a security risk.  Cheers!

 

I doubt that a takeover of Fiat in Europe by the Chinese would go through, much less atakeover of Chrysler. The US government found a security risk with Canada and Europe supplying steel to the US so one can be sure that they would find a risk with a Chinese company buying a US car company.

 

The problem with the car industry is that the pool of buyers is quite limited. I doubt that a GM Vhrysler combination would go though - maybe Ford Chrysler, if Ford gets into trouble, but if they do, how would they pay for Chrysler and Chrysler buying Ford defies the whole agenda of getting out of the car business for the Agnelli’s.

 

I think a GM/FCAU or F/FCAU deal would be approved as the U.S. will eventually have to accept a fully consolidated U.S. auto industry to compete on a global scale.  If don't believe in that and cannot accept it, then either combo would have too much market share in the U.S. regardless.

 

In terms of a Chinese acquisition, you are probably correct in the current climate.  But I would suspect the U.S. would not stand in the way if a trade agreement is approved, and Europe would have a hard time arguing in international courts that FCAU in Chinese hands would be a security or competitive risk to Europe. Cheers!

[Parsad]

I doubt that a GM Vhrysler combination would go though

 

Do you think Sergio would've tried so hard to get a deal done with GM if he didn't think there was a reasonable probability of a deal going through?  And he was probably a little bit more connected to the decision makers than we are...  And that was before Trump.  Consumers would benefit from auto consolidation.  The industry spends well over $2 billion a week on product development, which is probably half duplicative.  That gets passed on to consumers in the form of higher prices.  This isn't a high margin business with the exception of pickup trucks.  I think there would be zero problem getting a merger of GM + FCAU approved if FCAU spun-off Ram, which would be a pretty decent worst case regulatory scenario...  And a decent chance you could convince the Trump administration that they want America to dominate the auto business.

 

I agree with this sentiment.  Cheers!

[compounding]

https://seekingalpha.com/news/3445165-fiat-chrysler-rebuffed-peugeot-merger-pitch-earlier-year-wsj

 

Peugeot (OTCPK:PEUGF +3%) approached Fiat Chrysler (FCAU -2.8%) earlier this year about combining the two automakers, but FCAU rebuffed the pitch, as it had previous approaches by the French firm, WSJ reports.

 

FCAU has said it is open to a big deal with another automaker if it fits the company’s objectives but its controlling family, the Agnellis of Italy, opposes any deal that would include accepting a large proportion of Peugeot stock, according to the report.

 

Peugeot is still digesting its acquisition of General Motors' European business.

 

Yeah, that's what I thought.  I'm intrigued even by the fact they said that they wouldn't accept a deal with a "large" proportion of Peugeot stock.  They could do a leveraged buyout without much difficulty if they accepted 10-20% in stock and the rest cash. 

 

A deal with FCAU would be good for Peugeot, but FCAU could fit in with a number of other companies quite nicely...especially the Chinese!  Not sure why they aren't making a concerted run at FCAU.  Also, instead of selling Jaguar and Land Rover, Tata should do the leveraged takeover of FCAU and retain Jaguar and Landrover.  With Maserati and Alfa Romeo, plus all of the cash and cash flow coming in from Jeep and Ram, they could easily support their luxury brands and have a strong footprint in North America.

 

And of course GM...what is stopping them from making a deal with FCAU and taking a big chunk of the U.S. auto business.  It might be tough to get through anti-competition reviews, but the U.S. needs to accept that they really need to go to a single U.S. automaker to compete globally with Volkswagen, a possible future combination of Daimler & BMW, Hyundai/Kia and a future super-competitor from China.  Cheers!

 

I think you can assume that any large merger in the auto industry will be paid at least partly in stock. The companies are too big and complex not to have skin in the game for the sellers. Also, why wouldn't they want a part of a large merger since the synergies are, from their own account, so enormous? I would be wary as a buyer if the selling company was insistent on an all-cash deal. Probably the only scenario that I can see that happening would be if one of the Chinese get a bit desperate in their attempts to expand globally and gets cheap capital from the state to do it. And I think those in this thread that are skeptical that a Chinese buyout of FCAU would be approved are correct.

 

I don't see any of the established players, or say anyone without significant state backing, doing a leveraged buyout of another auto company. There's huge operating leverage, and adding financial leverage on top of that has rarely been a good idea in the auto industry, and everyone knows it after the GFC. And at this stage in the cycle? A decent part of the value creation in FCAU has been the transformation of the balance sheet remember.

 

What is stopping them is probably that GM has communicated for three years now that they have no interest whatsoever to merge with FCAU.

 

I'm more positive on the prospects of a merger between PSA and FCA than most people seem to be in this thread. Tavares has proven to be a fantastic manager of struggling auto companies, turning around Peugeot, Citroën and most recently Opel very quickly. They are posting waaay better margins than others in Europe and have around €8bn in net cash. They are in fact posting better margins than FCAU in total, despite their supposedly terrible brands and awful European concentration. I would personally be very interested to see what could happen in terms of cost cutting and consolidation globally, and how he would do with some brands that aren't actually terrible. My guess is better than with Opel.

[Spekulatius]

I'm more positive on the prospects of a merger between PSA and FCA than most people seem to be in this thread. Tavares has proven to be a fantastic manager of struggling auto companies, turning around Peugeot, Citroën and most recently Opel very quickly.

 

After reading up on Peugeot more, I agree with compounding that a tie up with FCAU would make a lot of sense. It is indeed impressive how Tavares has turned around Peugeot within 3 years and in struggling car market and with international markets breaking away. This turnaround is even more impressive than FCAU’s I think. I also believe that an Italian / French ops tieup would be easier to facilitate than with any other car maker due to cultural proximity. A tieup with FCAU also solves another problem for Peugeot, as it gives them access to N.A., which is a black hole for Peugeot right now. Peugeot has announced plans to renter the N.A. car market but it would certainly be much cheaper on the back of an existing distribution network.

 

I think we will hear more on this end. The French government, as well as the family and Chinese Dongfeng are large stakeholders and would have a say in a tieup.

 

I feel there is quite a bit opportunity to create value for shareholders in the auto sector, way more than the market is giving the companies credit for currently.