Friday, June 20, 2008

Tail Pipe Economies

What better place to find energy savings but at the exhaust end of a combustion engine? Although the primary focus of Clean Diesel Technologies, Inc. (CDTI: Nasdaq) is the reduction of harmful emissions, its products also help increase fuel efficiency and therefore make a gallon of gas or diesel fuel go further.

Clean Diesel Technologies is a developer of technologies and solutions that reduce harmful emissions and improve fuel economy in internal combustion engines. The Company’s product line includes fuel-born catalysts, a reagent injection system and particulate filters. Clean Diesel is building a network of licensees and distributors to market it products in the U.S., Europe and Asia.

Regulatory efforts to reduce air pollution and greenhouse gases are creating strong demand all around the world for Clean Diesel emission reduction solutions. Efficiency in design and superior performance help differentiate the Company’s products from competition in the highly fragmented automobile and truck component industry. A reorganize management team has put new momentum into Clean Diesel’s efforts to penetrate the market, establishing new license and distribution relationship with top suppliers such as Lubrizol, Robert Bosch and Tenneco. Clean Diesel has good balance sheet with no debt and sufficient cash resources to fund the current business development phase.

The market environment is more receptive than ever to Clean Diesel solutions. Fuel prices are at record levels. New national pollution abatement standards in jurisdictions around the world are creating a deeper sense of urgency among automotive manufacturers to incorporate pollution control devices in new engine models. Clean Diesel is approaching its various markets primarily through licensees and distributors. We believe agreements with Bosch and Tenneco, both tier one suppliers to the automotive industry, are particularly important in positioning Clean Diesel to participate in the new vehicle market.

Several impending catalysts could draw new investor interest and lead to price appreciation. Over the next several quarters strong year-over-year comparisons are expected, resulting from a dramatic ramp in sales activity from new marketing and distribution relationships established in 2007 and early 2008. Announcements of new marketing relationships are also expected as management continues to build the distribution network.

We also expect investors to begin looking carefully at "tail pipe economies" based on competitive positioning by major truck and auto makers. Ford's recent decision to hold back the most recent design of its flagship F10 pickup has certain got tongue wagging about the entire subject of vehicle fuel economics.


Neither the author of the Small Cap Copy web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein. Crystal Equity Research has a buy rating on CDTI shares.

1 comment:

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