Today, Chinese investors are probably the biggest market of Fiat Chrysler Automobiles, but the company wants to try out some options that would help boost their overall valuation. And one thing they are considering is to spin off both Maserati and Alfa Romeo like what they did with Ferrari last year. Doing so leaves them with no luxury brands.
So what they plan to do instead is to focus on volume or mass market cars within its portfolio, and these include models from Jeep, Dodge, and Ram. Already, this looks like it will attract the Chinese market, as Great Wall Motor Co. has already showed interest. Furthermore, none of these proposed deals are certain just yet. FCA thinks that by doing this, they will be more attractive to an outside buyer.
Also, Fiat Chrysler may hesitate to spin off Jeep as it looks like it is the most desirable segment of the automaker’s entire business. Having said that, Morgan Stanley analysts estimated that Jeep alone could be worth over $20 billion, and that is more than the estimated value of the whole FCA, making Jeep the company’s biggest contributor.
Maserati and Alfa Romeo combined is worth around $8.3 billion (7 billion Euros). On the other hand, other brands like Magneti Marelli plus their other assets add up to a total of around $5.9 billion (5 billion euros). All in all, FCA’s total business assets at the moment are worth as much as 50 billion euros according to Goldman Sachs.
If this proposed spinoff becomes finalized by FCA CEO Sergio Marchionne, Maserati and Alfa Romeo would be the next two brands to do so during his term. That’s already four brands in total, following CNH Industrial NV in 2011 and Ferrari in 2016. In today’s world, CNH and Ferrari have a market value of $57 billion, when both combined were only at $6 billion in 2004.
At this moment, FCA has partnerships with Chinese automakers including GAC when developing vehicles such as the Fiat Viaggio, Jeep Cherokee, and some others. This is why a Chinese takeover seems more viable, but of course, the company should still consider other available options. But here is the thing, AutoPacific analyst David Sullivan said that the only one who could take over Fiat Chrysler Automobiles would be one who has the money and a reason to do so, and that would be China.
As mentioned earlier, it is too soon to say what will happen to FCA, but we should get a final decision from them by early 2018. That’s because right now, the company would not give a comment on the matter.