FCAU - Fiat Chrysler Automobiles

[hyten1]

2citiescap

 

are you so sure its true that "there will be drastic reduction in car sales" (assuming no other technology that completely replace the need for cars, driverless or not)

 

i am not so sure.

 

with driverless cars there probably will be less cars on the planet at any given time, but this also means the cars need to be replaced more frequently. now if you start adding other factors, population growth, maybe more people will use cars now, car are been taken car of better as a fleet etc etc.

 

i honestly don't know how it will shake out.

 

EDIT: the talking point is, we need less cars when they become driverless, because now sam and bob can get rid of their car and share one car that drives itself.

 

But people forget pre/post driverless car we still need to transport sam and bob to their designated place, either by the car they use to own or buy a fleet of driverless cars. the number of miles driven doesn't really decrease most likely. many things will change some will mean less cars are needed, some means more etc. i honestly don't know how it will shake out. but is not plainly obvious less cars are needed.

 

hy

 

When driverless cars do become viable, this will drive a multi-year surge in sales as people move to this technology, similar to the migration to smartphones, after which we will move to a new steady state.  And for all the talk about technology companies getting into cars. it will still be the car manufacturers making the cars, not Apple and Google, so it would not be surprising to see higher car sales at some point in the not too distant future to support this migration

 

Agree. For all those worrying about driverless cars, do you guys even know how often a taxi driver changes his car or at least rebuild his engine? I think it is every 2-3 years.

Driverless cars don't make car depreciation per mile slower!

 

No, but they do make fleet far more efficient where the vast majority aren't sitting idle at any one time. There will still be a car industry and there will likely be a ramp up cycle that has the ability to increase sales, but if driverless cars really take over, the most likely impact would be a drastic reduction in car sales as you'd likely need far fewer vehicles on the road.

 

 

 

[glorysk87]

No, but they do make fleet far more efficient where the vast majority aren't sitting idle at any one time. There will still be a car industry and there will likely be a ramp up cycle that has the ability to increase sales, but if driverless cars really take over, the most likely impact would be a drastic reduction in car sales as you'd likely need far fewer vehicles on the road.

 

I think this is a mistaken and misguided thought process.

 

Just because there are fewer cars sitting idle doesn't necessarily have an impact on the number of total *car miles driven*.  Less cars on the road, but each car used much more frequently, should maintain the miles driven in aggregate. In fact, if driverless technology gets good enough for mainstream adoption, it may even increase total miles driven which would require a much faster replacement cycle and thus higher volumes of new cars.

[merkhet]

Just because there are fewer cars sitting idle doesn't necessarily have an impact on the number of total *car miles driven*.  Less cars on the road, but each car used much more frequently, should maintain the miles driven in aggregate. In fact, if driverless technology gets good enough for mainstream adoption, it may even increase total miles driven which would require a much faster replacement cycle and thus higher volumes of new cars.

 

Just to piggyback off this, I think that as you make something cheaper/easier to use, more people end up using it than before. I mean, if it's comparable to a bus fare, people who don't have cars might decide to use driverless cars rather than adhere to a bus route, etc.

 

But regardless, I don't think miles driven in aggregate goes down unless you get people pooling together in a much greater way than they currently do.

[Foreign Tuffett]

Just because there are fewer cars sitting idle doesn't necessarily have an impact on the number of total *car miles driven*.  Less cars on the road, but each car used much more frequently, should maintain the miles driven in aggregate. In fact, if driverless technology gets good enough for mainstream adoption, it may even increase total miles driven which would require a much faster replacement cycle and thus higher volumes of new cars.

 

Just to piggyback off this, I think that as you make something cheaper/easier to use, more people end up using it than before. I mean, if it's comparable to a bus fare, people who don't have cars might decide to use driverless cars rather than adhere to a bus route, etc.

 

But regardless, I don't think miles driven in aggregate goes down unless you get people pooling together in a much greater way than they currently do.

 

To piggyback a piggyback I agree that true autopilot technology will increase the amount of miles driven drastically since (as you guys are correctly pointing out) not having to perform the physical act of driving drastically reduces the marginal cost of car transportation. If you substantially lower the cost of something you will get much more of it.

 

Let's say I want to visit a relative who lives 700 miles away. Instead of booking a flight or spending an entire day driving, I can hop in a autopilot directed car one evening and arrive the next morning after having spent most or all of the trip sleeping....or watching Harry Potter movies.

 

One reason people (or at least Americans) love cars is the autonomy it gives them. Autopilot technology will effectively supercharge this autonomy.

[bbarberayr]

I also think you see job commuting go way up with driverless cars.

 

Currently an hour commute is a big time and energy commitment at the start and end of your day.  With driverless, you could catch a nap, watch the news, do extra work, etc.

 

I think a smart investment strategy in the future will be in real estate just outside of the current major suburb/commute communities as this gets extended and pushes up these home prices.

[Foreign Tuffett]

I don't want to derail the conversation, but has anyone spent much time looking at the other big non-luxury European automakers like PSA and Renault? I did a rough model of Renault today and it looks quite cheap once you adjust for the value of its stakes in Nissan and Daimler. Could this be a case of all the non-luxury European automakers trading at cheap multiples, with Fiat being lumped in with the rest of the group (even though it gets most of its revenue from US sales)? 

[dontdodebt]

I also think you see job commuting go way up with driverless cars.

 

Currently an hour commute is a big time and energy commitment at the start and end of your day.  With driverless, you could catch a nap, watch the news, do extra work, etc.

 

I think a smart investment strategy in the future will be in real estate just outside of the current major suburb/commute communities as this gets extended and pushes up these home prices.

 

All we can do is to speculate, but how long would one think that this shift will take? I would imagine it takes longer than some think at the moment.

My _speculation_ is something like: 5 years left to have the technque that is extremely good that people could trust. 5 more years for governemant and such until it gets allowed and maybe 5 more years until it really starts to be massively used. I.e. I think it will take at least 15 years until regular people start to use autodriven cars.

[bbarberayr]

TD Canada downgrading price targets on the auto parts makers - here is the summary on Magna:

 

Given the recent events in both the North American and European markets, we are

updating our production forecasts to reflect a slightly more subdued growth outlook in

both regions. The YTD U.S. light vehicle SAAR data has been below consensus that

is in line with our view of 2016 volumes representing the peak of the North American

cycle.

Moreover, the recent Brexit decision adds additional uncertainty with respect to the

outlook for European production volumes and its potential operational and financial

impact. Clearly, this event has placed heightened pressure on valuations within the

peer group and our concern is that the uncertainty could linger for some time.

As such, we believe that it is appropriate to incorporate a degree of conservatism

into our financial forecasts and more so to the applied target multiple at this time.

Our  view  remains  that  at  this  point  of  the  North  American  auto  cycle  and  with

the rapidly evolving changes in technology, investors should remain cautious with

respect to the applied multiples in the sector. Although this holds true for Magna as

well, it is our view that Magna is positioned to outperform the peer group on average

as it is well-placed to address the needs of the car of the future, it has a solid financial

position, and it should have a tailwind with the maturation of its investment in Getrag

in 2017.

TD Investment Conclusion

Our outlook remains cautious with respect to the returns for the auto suppliers over

the near-term and warrants higher rates of return upon investment. On a relative

basis, it is our view that Magna should outperform, and as such, we are maintaining

our BUY rating while lowering our target price to US$46.00 from US$51.00.

[fareastwarriors]

US autos: Adding new routes

 

The owner-driver model is under pressure but leading carmakers are fighting to stay relevant

 

 

http://www.ft.com/cms/s/0/a04bcc50-238c-11e6-aa98-db1e01fabc0c.html#axzz4E9C5mUS1

 

[merkhet]

http://www.bloomberg.com/news/articles/2016-07-18/fiat-chrysler-said-to-face-u-s-justice-department-fraud-probe

 

It'll be interesting to hear what they have to say on their next conference call. It seems to be a criminal investigation based off the civil RICO allegation from January. However, in January, Fiat US said they did an internal investigation and found the civil allegations to be without merit.

[merkhet]

https://next.ft.com/content/bc0874f0-4d28-11e6-88c5-db83e98a590a

 

Slightly more color on the issue.

[EliG]

https://next.ft.com/content/bc0874f0-4d28-11e6-88c5-db83e98a590a

 

Slightly more color on the issue.

 

FT:

 

Both the Department of Justice and the Securities and Exchanges Commission are investigating whether the company acted improperly when it booked sales to dealers, rather than to end customers, as completed transactions.

 

Booking sales to dealers seems to be standard industry practice.

 

Ford and GM disclosures:

 

 

 

h/t AZ_Value

 

[merkhet]

Agree, so unclear what FT is trying to say.

[kab60]

I have no skin in this (though I've been close to buying a couple of times) and no idea about the merits of this investigation but Fiats 2018 guidance and pretty precise expectations for its various units so far info the future (espescially as it's a cyclical Company) always bugged me a bit. Obviously one can then see if management delivers, but doesn't it increase the risk of trying to hit some very specific numbers? No comparision but I recall Mecham dumping XPO when they started doing the same (and I mean no comparision - XPO is a debt fueled roll-up and thus guidance three years ahead increases the risk of overpaying).

[racemize]

Marchionne has emphasized in calls in the last year that the specific numbers don't matter, only the financial targets.  You might argue that's worse, but it does make sense as various predicted demand has shifted.  I think his main point is that they aren't stupid, so they aren't going to stick with a plan that doesn't make sense anymore (e.g., hitting specific unit numbers).

[PLynchJr]

You have to wonder if this news leaked a while ago.  FCAU is down nearly 20% over the past 3 months with basically nothing but good auto sales news and some Brexit fear.  Today after this potentially really bad news it's down 2.5% which is an average days movement out of this volatile stock.

 

???

[rsmehta]

Just because there are fewer cars sitting idle doesn't necessarily have an impact on the number of total *car miles driven*.  Less cars on the road, but each car used much more frequently, should maintain the miles driven in aggregate. In fact, if driverless technology gets good enough for mainstream adoption, it may even increase total miles driven which would require a much faster replacement cycle and thus higher volumes of new cars.

 

Just to piggyback off this, I think that as you make something cheaper/easier to use, more people end up using it than before. I mean, if it's comparable to a bus fare, people who don't have cars might decide to use driverless cars rather than adhere to a bus route, etc.

 

But regardless, I don't think miles driven in aggregate goes down unless you get people pooling together in a much greater way than they currently do.

 

  A bit late to this topic --

 

    What about all the short-leg flights and public transportation people currently use??

 

    I can imagine people traveling a lot less by bus/rail/airplanes, and choosing to use their cars for trips with driverless cars.

 

----------------------------------------------------

 

    Tbh, I don't understand how anyone thinks the net aggregate mileage driven is going to go down by autos in USA.

 

    I do agree, that cars will be driving a lot more per year though.

 

 

    As technology gets better/more proven/safer, you may even see driverless auto's driving at much higher speeds, which will further take market share from other forms of transit.

[merkhet]

http://www.autonews.com/article/20160725/OEM/307259969/sources-fca-found-sales-were-inflated

 

An internal review ordered in mid-2015 by top Fiat Chrysler executives uncovered thousands of vehicle sales reported by FCA brands for which there were no actual buyers, according to two company sources.

 

The insiders told Automotive News that following the inquiry, U.S. sales head Reid Bigland put a stop to the practice, which had resulted in FCA US reporting more sales than it actually made.

 

The sources did not specify the precise time period covered by the review but said it revealed that 5,000 to 6,000 vehicles had been reported as sold by dealers and then "unwound."

[whatdadil9]

cash generation.

guidance raised.

benefits of mix evident.

stock down..............

[Phaceliacapital]

The "Sergio effect": When a stock opens -4% when announcing the results but goes up 4% once the CEO starts talking.

 

 

BTW the CFO has conservative targets and there is a big "plus" next to 2016 guidance.

 

:D

[rohitc99]

cash generation.

guidance raised.

benefits of mix evident.

stock down..............

performance does not matter !! ;) there are so many risks - brexit, china, us slowdown, self driving cars, tesla, gigafactory, possible meteorite crashing into earth and so on. all has to be discounted. ofcourse this is only valid for fca. for everyone else, there are no problems

[whatdadil9]

Seriously. Any explanation for todays price action?

 

I estimate the compnay will do in excess of 6.5b EUR EBIT this year and Magnetti is prob already at 8 percent EBIT margins.. One could make the argument that 6.5bn EUR of value could be extracted out of MM alone. EVERY other european auto maker was up today. What is the explanation for this?

[merkhet]

Probably still the restatement issues.

 

[racemize]

Seriously?  It really just doesn't seem like that big of deal...

[merkhet]

Seriously?  It really just doesn't seem like that big of deal...

 

I also can't imagine anything arising from what I've seen that would result in a grand jury investigation, but that's the rumor floating around right now.