Fiat Chrysler (FCAU)
from Global Investing
My main reason for tipping Big Board stock Fiat Chrysler (FCAU) is that its bid for GM is likely to go into overdrive after the VW scandal. VW, a potential buyer of GM, is now off the highway. GM would find it hard to build out its own multi-vehicle emissions systems, not just for diesel but also for gasoline cars and trucks. And tighter controls are surely in the works.
Fiat will add Mexico production to emerging markets where it already builds cars, including Brazil, Poland (via a joint venture with Suzuki), and Pune (India, via a joint venture with Tata, sold). It also has a plant in Poughkeepsie, NY. Its Brazil plant now produces electric cars, a greener alternative for California and Brazil, under a joint venture with Cemig and Itaipu, so even if diesel is debunked as a cheap green fuel, there is another alternative coming.
A warning. This is a speculation, mainly because we do not know the full terms of the spinoff by Fiat of 10% of its stake in Ferrari to finance its GM ambitions. FCAU is losing money. It depends on one very dynamic Italian manager, Signor Marchionne. Moreover, chartists warn that it is in a declining channel, which I think is mainly because it tracks Ford in Milan, which is traded in euros. Buy under $13.
Vivian Lewis, Global Investing, www.global-investing.com, 212-758-9480, September 24, 2015
