Is an Italian Car Company the Best Way to Profit from Economic Growth in China?

China's list of reforms from the recent Communist Party meeting are intended to empower the consumer through having the economy respond more to market demand. The passenger car industry with General Motors GM, Ford F, Toyota Motor Corporation TM, and others operating in the country is expected to expand, as a result. For investors looking for a smaller entity in the sector with significant upside, Fiat SPA FIATY, the Italian carmaker, is planning to greatly increase its production, sales, and dealerships in the People's Republic of China. As with Ford, General Motors, and Toyota Motor Corporation, it has been a good year for Fiat. Based in Torino, Italy, Fiat SPA has lucrative holdings in other car companies. Fiat owns more than half of Chrysler. It also owns Maserati, Alfa Romeo, and Lancia. In 2009, Fiat offered to buy the South American and Opel units of General Motors but was rebuffed. According to an article in The Wall Street Journal by Colum Murphy, "Fiat Plans to Double Output at China Venture," it is seeking to expand its presence in the world's most populous nation that has more purchasing power than any other country. Sales of Fiat's Viaggio sedan, produced in a joint venture with Guangzhou Automobile Group, were 11,228 in 2012. That figure is expected to reach 37,913 for this year, according to IHS Global Insight, a research firm. The number of dealerships will increase by almost 50%, too. By the standards of the automobile manufacturing sector, FIAT SPA is a small cap, in both price and size. The market capitalization is under $10 billion and the price is under $8 a share. General Motors goes for over $38 a share with a market capitalization of over $50 billion. The market capitalization for Toyota Motor Corporation is nearly $200 billion with a stock price of around $125 a share. Ford sells for more than $17 with a market capitalization of more than $67 billion. The projected increase in sales in China could do much to move the stock price higher for a company the size of Fiat's.