A proposed merger of Fiat-Chrysler and Renault could bring new exotic vehicles to the U.S. market in an industry where some see consolidation as the way forward.
With the Fiat-Renault deal in the works, there’s the expectation that the phenomenon of auto firms acquiring each other will accelerate. Companies merge to get rid of bad debt, to boost sales, or as a means of ‘making something new’ in the marketplace.
That last part has a lot to do with the potential for Fiat-Renault. Renault has made great strides in the electric car arena — and the global market is clamoring for plug-ins to lower greenhouse gas emissions.
But there’s also the potential for this newly merged entity to start making new vehicles that work well with self-driving or autonomous technology … Current trends seem to indicate that self-driving cars will hit the market sooner rather than later.
Key Hurdles
Of course, Fiat-Renault isn’t a done deal. The parties still have to come to the table on valuation, for example. But in all probability, the news has already helped prop up the stocks for both companies. Fiat spiked around 5–6% recently, and Renault saw about the same rise around the same time.
There’s also the promise of blending international brands … just because Renault hasn’t been seen on American roads in the past doesn’t mean the French brand won’t be a hit.
Here’s a tidbit for comparison: Recently, news broke that a Chinese-owned Swedish interest is set to revive some of the Saab engineering that snagged intense American interest in the mid-80s. The cars will be made under the name NEVS (National Electric Vehicle Sweden) but will likely include notable Saab features.
One way to get into this quickly evolving market can be to hunker down on brands … FOR EXAMPLE: Buying stocks of automakers that seem primed for growth.
But another strategy would be to look for sympathy plays. That’s where you watch secondary stocks around the new technology — solar stocks for electric vehicle charges, say, or stocks that support autonomous design research.
How do you play the auto sector? What’s your strategy to play these auto mergers? Leave a comment…
