In a recent news report, the FT reported potential merger talks between Renault and Fiat (FCA) in the near future. We think this merger makes sense given current trends in the auto market and both companies' track record. Despite the potential merger-driven optimism, investors should also be cognizant of FCA's challenged near-term fundamentals as the truck cycle peaks.
In our view, this deal is net-bullish for FCA investors. While FCA is an exceptionally-managed company with a strong market position in the US thanks to its Jeep and RAM brands, we think the US truck