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Old 2nd May 2017, 20:07   #1
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Default Rumour: FCA considering spinning out Jeep & Ram into a separate company

Fiat Chrysler Automobiles CEO, Sergio Marchionne, dropped a possible bombshell of an answer last Wednesday when he was asked if the automaker's Jeep and Ram brands, either together or separately, could be spun off into a separate, standalone company.

His answer - "Yes".

Although it seems like a remote possibility for now, Marchionne is not new to spinning off separate company entities out of the FCA organisation.

Back in 2011, he separated Fiat and Fiat Industrial (the Italian company's agricultural manufacturing division) into two companies. 6 years later, the now-renamed CNH Industrial has annual sales of more than $25 billion and is actively traded on the New York Stock Exchange.

A more recent story is the spinning-off of Ferrari into a standalone company last year, which has resulted in NYSE trading of Ferrari at more than $75 per share and which has resulted in generating more than $3.4 billion in annual revenue and close to $435 million in net income.

Speculation is rife that this is the first clear indication of FCA filing for possible bankruptcy in the future, if and when they decide to spin out Jeep & Ram as a separate, standalone company.

Rumour: FCA considering spinning out Jeep & Ram into a separate company-cdjr.jpg
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A spin-off of Ram and Jeep, if it happens, would not necessarily mean those brands would be cut off from the automaker. Marchionne remains chairman and CEO of Ferrari and is chairman of CNH Industrial. Exor, an investment fund whose chairman and CEO is John Elkann, owns 26.9% of CNH Industrial's shares and 22% of Ferrari's shares. Elkann is the great-grandson of Fiat founder Giovanni Agnelli.

Morgan Stanley's Adam Jonas, the analyst who asked Marchionne about spinning off Ram and Jeep, dropped the issue after one question and moved on to another topic. But it's not the first time that Jonas has explored the issue. In January, Jonas estimated that Jeep's value on a standalone basis would be $22 billion (about 20.3 billion euro), which was more than the market capitalization of Fiat Chrysler at the time. Jeep has been growing rapidly in recent years. Its sales have climbed from less than 500,000 in 2008 to more than 1.4 million last year.

Jonas also values Ram at $11.2 billion (about 10.3 billion euro), Maserati at $3.5 billion (roughly 3.2 billion euro), and parts and components divisions Magnetti Marelli and Teskid at $3.5 billion (about 3.2 billion euro).

Marchionne set a goal in 2014 for Jeep's annual sales to exceed 2 million SUVs annually by 2018, and the brand is on track to meet that goal, Fiat Chrysler Chief Financial Officer Richard Palmer said Wednesday.
Detroit Free Press
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Old 3rd May 2017, 11:38   #2
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Default Re: Rumour: FCA considering spinning out Jeep & Ram into a separate company

I don't think Sergio has clarity of thought as every month, we hear of a new strategy (merger with GM, merger with VW, Ferrari IPO and what not). Sergio is behaving more like a desperate investment banker than the CEO of a car company.

Jeep is an incredible brand and a powerful contributor to the bottom line. Separating it will reduce the value of FCA substantially. The Americans must be fuming at such statements - Chrysler & Dodge are product wise in relatively weak positions today anyway.

If Jeep were to branch out independently, it'll have a line of suitors waiting to control it. Brand Jeep has rich heritage, value & pull.
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Old 4th May 2017, 09:07   #3
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Default Re: Rumour: FCA considering spinning out Jeep & Ram into a separate company

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Originally Posted by GTO View Post
I don't think Sergio has clarity of thought as every month, we hear of a new strategy (merger with GM, merger with VW, Ferrari IPO and what not). Sergio is behaving more like a desperate investment banker than the CEO of a car company.
I've always maintained that Sergio Marchionne isn't the leader that people make him out to be, perhaps he got a fair bit of love simply because most people loved anything and everything Ferrari, and Alfa Romeo and maybe, Fiat as a brand.

Fact is that he's not an engineer, he doesn't get into product planning, product vision or quality control, he is a chartered accountant and a good one. He has always been a taxation specialist and spent time in Deloitte and Alusuisse Lonza working on saving tax, money and straightening out bureaucratic hurdles for them, to him the only bottom line that matters is the bottom line itself. I don't think for a second that Fiat is ignoring India, given that they have the highest profitability % in the nation given even their dismal sales, they are EXACTLY where Sergio wants them to be, this is his style of operations.

He was appointed as an independent board member simply to overlook and supervise the acquisition of Chrysler and even then he had to run his mouth to the press :
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In February 2011 Marchionne sparked widespread controversy in the U.S. when he remarked at the J.D. Power & Associates International Automotive Roundtable that Chrysler's bail-out loans from the U.S. government carried "shyster rates"
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Massimo Vecchio, an analyst with Mediobanca, commented on the contrast and Marchionne's controversial management style, stating: "He's got a lot of American in his management style. The only thing that matters to him is results. If you don't deliver, you are out. He is quite ruthless. When Marchionne took over the company [Fiat], he was literally firing one manager a day but there was a leadership problem and nobody wanted to take hard decisions. The communication from bottom to top in management was slow and wrong. He also changed that. He reduced the layers of management and gave his role a more direct view of what the business was going. And of course his ego is very big and sometimes people who had clashes with him were basically fired. Looking at his style from outside it seems awful, but he delivered."
He will continue to deliver, financially and as a form where percentage of gains from the overall sales, howsoever small, shall be great. From a product perspective? Nah.

Source : Wiki.
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