FCAU - Fiat Chrysler Automobiles

[Edward]

Fiat is still considerably cheaper on a CF basis than GM who is cheaper than the other automakers (except Renault and Pegeut which I would stay away from, because of the European exposure).  Fiat with Chrysler will sell about 50% in Us, 25% in Brazil and the rest in Europe. 

There is a huge difference between Renault and Peugeot. Peugeot is doomed because it has most of its sales in Europe and also has a weak balance sheet.

 

Renault has a net cash position on the balance sheet, and holds a 43% stake in Nissan (also in a net cash position). This effectively means that combined with the pro rata sales of Nissan, Renault has less than 25% of its sales in Europe, about the same as your calculation for Fiat.

 

I like Renault-Nissan better because they are present in all the markets, not just US, EU and Brazil. They also have combined scale that is about twice Fiat-Chrysler which lets them invest in technology and compete better globally.

[Packer16]

You are correct.  I read some the Renault thread and it does appear that Renault is in a good position much better than Peugeot.    However, via its use of debt, I think Fiat has more upside.  Given the maturity of the industry and the cost of borrowing, I think having some debt makes sense.  The CEO did a great job with the Nissan turnaround.  Do you know if Renault us planning on raising debt or at least having a cash neutral position? 

 

Packer

[Edward]

However, via its use of debt, I think Fiat has more upside.  Given the maturity of the industry and the cost of borrowing, I think having some debt makes sense. 

I will reiterate what Hugh Hendry once said about financial and operational leverage - When you have big operational leverage you can not entertain debt, because you will get wiped out in a recession. Autos have some serious operational leverage built in and I wouldn't want to have debt when the proverbial hits the fan (aka Peugeot). This is one reason I actually prefer Renault over Fiat, although I agree that the debt cost is low.

 

The way I think about it - if you want to lever up on debt, why not do it yourself to the level your'e comfortable with? Shorting treasuries is one way of doing that, options another.

 

 

Do you know if Renault us planning on raising debt or at least having a cash neutral position? 

Both Renault and Nissan intend to have a few B$ in net cash position. Renault probably could make due with 1-2B$, Nissan declared 3B$ net cash will do (they currently have 1B$).

[plato1976]

fiat probably had no choice , but to carry some debt ;

the question is really when they are in better shape after the merge of fiat/chrysler, will they gradually deleverage ?

or it's their strategy to maintain a high debt level ?

 

 

However, via its use of debt, I think Fiat has more upside.  Given the maturity of the industry and the cost of borrowing, I think having some debt makes sense. 

I will reiterate what Hugh Hendry once said about financial and operational leverage - When you have big operational leverage you can not entertain debt, because you will get wiped out in a recession. Autos have some serious operational leverage built in and I wouldn't want to have debt when the proverbial hits the fan (aka Peugeot). This is one reason I actually prefer Renault over Fiat, although I agree that the debt cost is low.

 

The way I think about it - if you want to lever up on debt, why not do it yourself to the level your'e comfortable with? Shorting treasuries is one way of doing that, options another.

 

 

Do you know if Renault us planning on raising debt or at least having a cash neutral position? 

Both Renault and Nissan intend to have a few B$ in net cash position. Renault probably could make due with 1-2B$, Nissan declared 3B$ net cash will do (they currently have 1B$).

[PlanMaestro]

EVO on the Ghibli.

http://www.evo.co.uk/carreviews/evocarreviews/290119/2013_maserati_ghibli_review.html

 

How does it compare?

 

The new Maserati Ghibli is an exciting new entrant to a very competitive class. It’s a stylish car and the new petrol engines suit it well. Being able to buy a diesel Maserati Ghibli is bound to help it gain sales in Europe, I just wish the engine was a more competitive unit, as it lacks the top-end spark found in the best sporting diesel engines like BMW’s turbo straight-sixes. Inside, the Ghibli feels very luxurious and from a class above cars like the Mercedes E-class and BMW 5-series.

 

Anything else I need to know?

 

The really good news is how aggressively priced the new Maserati Ghibli is. Prices start at £48,830 for the Ghibli Diesel, while the 325bhp Ghibli is the bargain of the bunch at £52,275. The UK range is topped off by the Ghibli S, which lists at £63,415. All cars come with a three-year, unlimited-mile warranty and deliveries in the UK start in October 2013.

[vpagano]

Fiat utilizing some production capabilities in Italy, producing vans w/ Peugeot

 

http://www.bloomberg.com/news/2013-07-05/fiat-said-to-agree-with-peugeot-on-investment-in-van-partnership.html

[vpagano]

Fiat exercises option for next 3.3% of Chrysler.

 

http://online.wsj.com/article/SB10001424127887323823004578593153471184048.html

[PlanMaestro]

Marchionne puts new model investments on hold in Italy after court ruling http://www.autonews.com/article/20130709/COPY01/307099946#ixzz2YZud5ybh

[PlanMaestro]

John Elkann: Fiat's fresh face

http://money.cnn.com/2013/07/08/news/companies/elkann-fiat-exor.pr.fortune/index.html

 

> relevant also for Exor.

[brker_guy]

It is nice designers have picked 3 of FIAT's cars on the best looking convertibles list:

 

http://autos.yahoo.com/news/top-designers-pick-10-best-convertible-designs-of-all-time-215426762.html?page=all

[Phaceliacapital]

Thanks PM, that was an extremely interesting read!

[Olmsted]

Creative advertisement, to say the least:

 

http://www.autonews.com/article/20130712/RETAIL03/130719947/in-new-fiat-ad-the-car-is-alive

 

http://www.autonews.com/apps/pbcsi.dll/storyimage/CA/20130712/RETAIL03/130719947/AR/0/AR-130719947.jpg&MaxW=622

[Guest wellmont]

the quiet smart guys are all invested here. I am going to have to coat tail. :)

[Packer16]

Another European car maker with good international exposure and a cheap price is Renault.

 

Packer

[PlanMaestro]

Another European car maker with good international exposure and a cheap price is Renault.

 

Packer

 

Yep and Ghosn is good. You have to balance Nissan-Renault's larger scale, better balance sheet and country diversification, versus

 

* Ferrari brand is special.

* Option value of Maserati and Alfa

* Jeep global opportunity

* More exposure to US pent-up demand

* New US financing arm with Santander

* Option of buying VEBA's stake at a very cheap price

* Exor's capital allocation and support.

 

Both should do well and possibly Nissan-Renault has an even better downside protection. It's just that I like all these free options a lot.

[vpagano]

Fiat presence in India, looking to expand Jeep:

 

http://www.exchange4media.com/51981_jeep-from-fiat-chrysler-scouts-for-creative-partner.html

 

"We want to be a significant player in this market. We were a top player once, we want to get back. We want to double our market share, which is less than 1% as of now. We sell around 7,000 cars per annum, we are looking to double this number after opening 100 dealerships by the end of this year."

 

http://www.business-standard.com/article/companies/we-want-to-approach-our-old-customers-in-smaller-cities-fiat-113071800802_1.html

[vpagano]

Maserati looking to disrupt Mercedes and BMW, still 50,000 car target by 2015

 

http://www.theepochtimes.com/n3/185231-century-old-marque-to-lead-fiats-luxury-revival/

[PlanMaestro]

Fiat's Italian suppliers grab Chrysler lifeline > The Poltrona Frau story

 

http://europe.autonews.com/apps/pbcs.dll/article?AID=/20130718/ANE/130719859/fiats-italian-suppliers-grab-chrysler-lifeline#axzz2ZQKfqEeH

[PlanMaestro]

LED acceptance is vital to Marelli's U.S. growth  > Magneti Marelli's US plans

http://www.autonews.com/article/20130715/OEM10/307159943#ixzz2ZYDidTHt

 

[PlanMaestro]

Fiat-Chrysler mull rwd platform > more on Alfa plans.

http://www.autonews.com/article/20130722/COPY01/307229934#ixzz2ZnMvWBGu

 

[merkhet]

http://www.valuewalk.com/2013/07/chanos-shorts-caterpillar/

 

I could use some more cheap shares of Fiat...

[Packer16]

Nice to know that Chanos and others are short and hedging with VW??  It makes me want to go out buy some more.

 

Packer

[vpagano]

Chanos has been wrong all along, saying Fiat would undergo a rather dilutive offering to acquire the rest of Chrysler. We know financing is in place when the time comes. He has been short so long, he must be getting killed on this trade. Is he waiting for a major pullback to proclaim himself "correct"? I don't understand why he would keep the trade on in the middle of an automotive sector recovery, as part of a pair trade or not.  I see it as good for us longs anyway!

[krazeenyc]

Chanos has been wrong all along, saying Fiat would undergo a rather dilutive offering to acquire the rest of Chrysler. We know financing is in place when the time comes. He has been short so long, he must be getting killed on this trade. Is he waiting for a major pullback to proclaim himself "correct"? I don't understand why he would keep the trade on in the middle of an automotive sector recovery, as part of a pair trade or not.  I see it as good for us longs anyway!

 

Isn't he long both VW and GM?

[LC]

His trade is prob short Fiat and long Chrysler comps. Reason being the price Fiat will have to pay for Chrysler is dependent on a WAVE multiple of Chrysler comps. And the judge pushed his decision back, thereby giving the comps more time to recover and push up the multiple.