Will Alfa Romeo and Maserati Split Off from FCA?
The latest news from Fiat Chrysler indicates that Alfa and Maserati might be following the same path as Ferrari
Rumors began circulating earlier this month of a Chinese automaker looking to acquire all of the brands currently under the Fiat Chrysler Automobile umbrella. As it turns out, the Great Wall Motor Company, the aforementioned interested party, was only really interested in obtaining the Jeep brand. As splitting the Jeep brand from the rest of FCA would most likely cause its fellow automotive brands to collapse, talks of the purchase have pretty much fallen apart. However, murmurs of some of FCA’s other brands splitting off have emerged in the wake. Several people close to FCA have stated that the automaker is considering splitting the Maserati and Alfa Romeo brands from the company.
Together, the value of these two luxury brands could reach up to €7 billion (or $8.3 billion). Meanwhile, FCA is considering the option of separating its Magneti Marelli parts business from the FCA family as well. Spinning off certain brands has been successful for FCA in the past, in terms of increasing profits and eliminating debt. For example, when the automaker spun off the tractor manufacturer CNH Industrial NV in 2011, the result was highly profitable for both groups. Perhaps the most famous of these spin offs was Ferrari in 2016. Together, the combined value of CNH Industrial and Ferrari has increased from $6 billion to $57 billion since 2004.
Still, many in FCA’s ranks worry that the Maserati and Alfa Romeo brands might not have the same allure that the Ferrari brand does. As such, the company may consider selling them to a second partner, rather than just spinning them off. This year alone, FCA has already spent a great deal of money to bring the Alfa brand back to the states. This includes an extensive and expensive Super Bowl advertising campaign.
Even more worrisome is the effect Maserati leaving could have on the brand. Recently, FCA announced that the Maserati brand would be pursuing a future path of luxury electric models. Without the brand as a part of FCA, the company will once again be falling far behind its competitors in terms of fuel economy and electric innovations. Consolidation to increase profits has always been a major strategy utilized by FCA CEO Sergio Marchionne. If everything goes right, the value of FCA, Maserati, and Alfa Romeo could all benefit from a formal separation.
News Source: Bloomberg