Much of the speculation in the leadup to Fiat’s five year plan announcement centered on a long-rumored spin-off of Fiat’s auto business from the rest of the industrial conglomerate. Speculators even drove up Fiat’s share price considerably yesterday on hopes that the long-awaited spin-off would be announced today. And sure enough, Fiat did announce today that it would be spinning off part of its business. The only problem, according to Automotive News [sub], is that the newly-formed unit isn’t made up of Fiat, Alfa and Lancia, but Iveco and New Case Holland. Instead of its car operations, Fiat is bundling off its heavy commercial truck and tractor business into a new entity known as Fiat Industrial S.p.A. (Fiat-branded light commercial vehicles and Fiat Powertrain will remain behind).
Needless to say, this move comes as a significant surprise to most observers and analysts. By not creating a separate auto unit, Fiat is forgoing an opportunity to enable easier alliances in the future, and launch a share sale to fund planned growth. But then, with turnarounds afoot at most of its auto brands, including a challenging integration with Chrysler, Fiat’s car business doesn’t need to be distracted by the possibility of future alliances. Making the current hodgepodge of brands it currently has in Fiat-Chrysler work will be tough enough. And with heavy commercial vehicles operating independently, analysts will still have a better sense of Fiat’s overall and auto division performance. According to Reuters, the spin-off will be complete by the end of this year.