- Fiat is trying to push that its brand is stylish and hip, but it may have gone too far.
- Sales rose 18% in May and 17% since the beginning of the year, but the new ad campaign may cause a slowdown.
- Fiat's new ad campaign is courageous but very risky. Fiat should focus its marketing on its practicality and quantifiable facets instead of offending the senses.
- Fiat Chrysler Automobiles (FCA) presented recently its ambitious five-year strategic plan, aiming at strong growth and higher profitability during 2014-2018.
- Its targets are mainly dependent on major expansion of both the Jeep and Alfa Romeo brands, which are expected to post unit sales CAGR of 22% and 40%, respectively.
- No equity issuance is expected, net debt should be stable until 2016, and free cash flow should improve, something that the market is clearly questioning if it is reasonable.
- Despite the low likelihood of this plan being achievable, Fiat has good value over the long term, even if the company does not completely deliver on its targets.
Fiat Chrysler: The Valuation Is Cheap Even If You Do Not Believe In The 2018 Targets
- Investors gave little credit yesterday to Fiat’s 2018 targets: the group plans notably to increase its net income to around EUR5bn in 2018 from EUR0.9bn in 2013.
- They also remained concerned about the group’s balance sheet.
- But we remain confident that a mix of capital increase, disposals and improving cash generation will gradually reduce the group’s debt and the stock beta and sustain the rerating.
- Even assuming a 30% miss on 2018 targets and a capital increase, the stock’s 2018 P/E would be cheap around 3.5x.
- Cheap valuation – absolute and especially on relative basis vs General Motors and Ford.
- A very solid CEO - Sergio Marchionne was the 5th CEO in just 2 years before he took over in 2004.
- Boost from recent Chrysler acquisition - Fiat is now the 7th largest auto company in the world.
- Bad economic conditions in Southern Europe - have affected the company negatively.
- New premium strategy - less vulnerability to cyclical economic downturns.
A Call On The European Car Industry: Long Peugeot, Short Fiat
- How to get exposed to a recovery of European car industry? Be long Peugeot, short Fiat.
- Peugeot's new "ticket," with Tavares as CEO and Gallois as chairman, is very promising.
- Product lineup is far richer at Peugeot than at Fiat.
- Geo mix: A call option on China for Peugeot, vs. U.S. exposure for Fiat.
- Valuation: Two cash-burning companies, but Peugeot looks cheaper on multiples.
Fri, Oct. 17, 7:40 AM
- Automobile registrations rose 6.4% to 1.235M vehicles in September, according to the European Automobile Manufacturers Association.
- A strong rate of growth was seen across European Union nations.
- The month included an extra selling day compared to a year ago.
- Sales growth by automaker: Volkswagen (OTCQX:VLKAY) +6.7%, Peugeot (OTCPK:PEUGY) +9.8%, Fiat (NYSE:FCAU) +6.1%, General Motors (NYSE:GM) -5.9, Renault (OTC:RNSDF) +10.7, Daimler (OTCPK:DDAIF) +5.2%, Toyota (NYSE:TM) +0.4%, Ford (NYSE:F) +6.7%, BMW (OTCPK:BAMXY) -1.0%, Nissan (OTCPK:NSANY) +16.9%, Hyundai (OTC:HYMLF) +6.3%, Mazda (OTCPK:MZDAY) +26.4%, Subaru (OTCPK:FUJHY) +8.5%, Jaguar Land Rover (NYSE:TTM) +3.9%.
Thu, Oct. 16, 11:32 AM
- An American model has cracked the top ten in Japan's Car of the Year competition for the first time ever with the new Jeep Cherokee slotting in at number eight.
- Though the 2015 Mazda2 (OTCPK:MZDAY) landed the big trophy, the Cherokee's strong reception in Japan is in the words of Autoblog.com a "seriously big deal" for Fiat Chrysler Automotive (NYSE:FCAU).
Thu, Oct. 16, 8:10 AM
- Fiat Chrysler Automotive (NYSE:FCAU) recalls 900K vehicles in separate recall actions.
- The first broad recall of 470K cars and SUVs is tied to a problem with an amp alternator.
- The second recall of 437K Jeep Wranglers from the model years 2011 to 2013 is due to the risk of an electrical short in the power mirror.
Tue, Oct. 14, 9:32 AM| Comment!
Mon, Oct. 13, 4:32 PM
- Fiat Chrysler Automotives (NYSE:FCAU) ended its first day on the NYSE down 0.9% from the opening price of shares.
- Secondary shares listed in Milan closed with a 4% gain.
- Fiat Chrysler CEO Sergio Marchionne talked up the automaker on the floor of the exchange during the day: "One of the Detroit Three is coming home."
- Automobile analysts see the bigger story as the ambitious plan of the company to boost vehicles by 60% to 7M per year by 2018. Many see Marchionne's goal as a bit too high.
Mon, Oct. 13, 9:49 AM
- Fiat Chrysler Automotive (NYSE:FCAU) begins trading on the NYSE at $9 per share.
- Shares drove to as high as $9.40 in the first batch of trades.
Sun, Oct. 12, 5:53 AM
- Fiat (OTCPK:FIATY, OTCPK:FIADF) confirms the execution of its merger deed with Chrysler at a ratio one Fiat share for one FCA share (Fiat Chrysler Automobiles).
- Shares will begin trading under the symbol FCAU tomorrow morning.
- Note: Seeking Alpha alert subscribers to FIATY and FIADF will be auto-subscribed to the new symbol FCAU.
Wed, Oct. 8, 1:53 PM
- The EPA says the fuel economy of 2013 models sold in the U.S. averaged 24.1 mpg, up half a mpg from the prior year's model.
- The modest 2.1% improvement is below the pace called for by some environmental groups and just a fraction of what would be needed to keep pace with the government's target for a 54.5 average mpg for the 2016 model year.
- A higher mix of SUV and truck sales offset technology gains by automakers.
- Related stocks: GM, F, TM, OTCPK:FIATY, HMC, OTCPK:NSANY, TSLA, OTCQX:VLKAY, OTCPK:DDAIF, OTC:HYMLF, OTCPK:BAMXY, OTC:KIMTF, OTCPK:MMTOF, TTM, OTCPK:SZKMY, OTCPK:FUJHY, HMC, FCA.
Wed, Oct. 8, 7:50 AM
- Fiat (OTCPK:FIATY) CEO Sergio Marchionne thinks there is room in the industry for a merger to create an automaker bigger than Toyota.
- Marchionne might be the man for the job after helping guiding the acquisition of Chrysler from Daimler and pushing Fiat through a complicated transaction to create Fiat Chrysler Automotive (NYSEARCA:FCA).
- Morningstar analyst Richard Hilgert agrees that the auto industry may see more M&A activity due to the needed economies of scale to compete.
- Automaker stocks: GM, F, TM, OTCPK:FIATY, HMC, OTCPK:NSANY, TSLA, OTCQX:VLKAY, OTCPK:DDAIF, OTC:HYMLF, OTCPK:BAMXY, OTC:KIMTF, OTCPK:MMTOF, OTCPK:PEUGF, OTC:RNSDF, TTM, OTCPK:SZKMY.
Wed, Oct. 8, 4:28 AM
- Fiat (OTCPK:FIATY) CEO Sergio Marchionne plans to step down in 2018 following his completion of a five-year strategic plan of the automaker's merger with Chrysler.
- Marchionne has tripled Fiat’s revenue and operating profit since taking charge of the automaker in June 2004.
- With the merger of Fiat Chrysler Automobiles to take effect on Oct. 12, his last goal will be to boost net income fivefold to about €5B ($6.3B) in 2018.
Tue, Oct. 7, 3:22 AM
- Fiat (OTCPK:FIATY) says its merger with Chrysler will be effective as of Oct. 12 after creditors had not opposed the merger and the amount of money to be paid to shareholders that chose to sell their shares had not exceeded the €500M cap set by the company.
- Shares in the new holding Fiat Chrysler Automobiles will start trading on the NYSE on Oct. 13, under the symbol FCAU.
Mon, Oct. 6, 10:07 AM
Mon, Oct. 6, 7:24 AM
- Fiat Chrysler (OTCPK:FIATY) CEo Sergio Marchionne dropped some strong hints last week at the Paris auto show that the next-generation Jeep Wrangler will see some major changes.
- The exec indicated an all-aluminum frame for the popular Wrangler model is under consideration by the automaker.
- The change could see production shifted out of Toledo where 223K Wranglers are pumped out annually.
Fri, Oct. 3, 8:28 AM
- An interesting pullout from recent reports on U.S. auto sales is the incredible surge in demand for Dodge Ram trucks in Southern California.
- Registrations of Ram (1500, 2500, 3500) trucks in California have skyrocketed 86% to 12,477 units for the first seven months of the year.
- Industry watchers note Chrysler (OTCPK:FIATY) has introduced marketing campaigns designed specifically for California in a bid to help it improve market share.
Wed, Oct. 1, 2:41 PM
Wed, Oct. 1, 8:12 AM
- Chrysler (OTCPK:FIATY) reports it recorded its best September since 2005.
- Brand sales growth: Fiat +6%; Chrysler +14%; Jeep +47%; Dodge -9%; Ram +35%.
- Model sales growth: Jeep Patriot +51% to 9,117; Jeep Wrangler +16% to 13,955; Jeep Grand Cherokee -14% to 12,854; Jeep Cherokee (new) 14,639; Dodge Caravan +3% to 11,75; Dodge Ram P/U +30% to 36,612, Chrysler Town & Country +23% to 13,029.
- The automaker says it ended the month with 71 days supply of inventory vs. 64 days last month.
FCAU vs. ETF Alternatives
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