By on October 29, 2014

Ferrari-458-Speciale-A-1

By this time next year, Ferrari will no longer be a part of Fiat Chrysler Automobiles, thanks to a plan announced today that will spin the exotic brand off from the rest of the Italo-American automaker.

Bloomberg reports FCA will sell 10 percent of its stake to the public, giving the remaining 90 percent to the automaker’s own shareholders. The shares will be listed in the United States stock market, with Europe possibly receiving some of those shares, as well.

According to Morningstar analyst Richard Hilgert, the split “unlocks the value” in the Ferrari brand, which could be worth as much as $7.4 billion. He adds that the move helps pull Ferrari out of the shadow of FCA, citing “the street’s perception of low profitability to no profitability” regarding the automaker’s market performance.

Speaking of performance, FCA stock climbed to $11.56 Wednesday after opening at $11.31, falling to $10.85 at the closing bell. Ferrari stock, meanwhile, would go for $5.90/share for FCA shareholders.

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34 Comments on “FCA Spinning Ferrari Off From Parent Company By 2015...”


  • avatar
    sportyaccordy

    Ferrari just got on the only lifeboat from the FCA Titanic.

    • 0 avatar
      NN

      FCA Titanic? Hardly. Yes, CR just bashed them on quality; which has never been Chrysler’s nor Fiat’s strength. Nothing new there, quality has has never effected their sales of hot products–when they make them. And they’re making them now…the whole Jeep lineup (soon to see vastly more worldwide success thanks to the Renegade), and RAM trucks taking more market share year after year. Maserati sales exploding worldwide…small volume, but potential large profits. Fiat is still weak in Europe but strong in South America.

      Personally, despite subpar products in some categories still, I think FCA is probably going to continue on their hot streak, sales wise, for quite some time.

      • 0 avatar
        VoGo

        Maybe,
        But VW is wiping the floor with Fiat in Europe, and the US operations are one recession away from their final brush with bankruptcy. FCA is not a stock I would own for the long haul.

      • 0 avatar
        sportyaccordy

        Jeep and RAM are OK now that gas is cheap, but if we hit another spike they will be down too. Fiat is a mess, Chrysler is selling 200s for 5 figures less than MSRP, Dodge’s cars aren’t competitive, the LX trio is way down from peak numbers, and according to C&D Maserati is not doing well either… the Ghibli has a lot of fundamental problems and cost cutting issues (like a crappy UI on its ICE). Barring the 500, the LXs and the Grand Cherokee, pretty much all of FCA’s products NEED to be BETTER than the competition, but are actually BEHIND.

        And on top of all this, Marchionne wants to revitalize Alfa, while pushing Maserati down market. It just isn’t adding up man.

        • 0 avatar
          Big Al from Oz

          sportyaccordy,
          It wasn’t adding up previously. It’s doing better now. I do have faith in Sergio.

          FCA products are getting better in the quality stakes.

          I do think the way the world of motor vehicle manufacturing is changing some very odd changes will occur.

          • 0 avatar
            danio3834

            He’s in his own world busy confirming his own biases.

            “Chrysler is selling 200s for 5 figures less than MSRP” No they aren’t.

            “and according to C&D Maserati is not doing well either” 300%+ growth in sales and increase in profitability…yeah, circling the drain.

            “Dodge’s cars aren’t competitive” – BS they aren’t. Compare them instead of relying on second or third hand internet banter. They don’t sell in the numbers as some competitors, but they aren’t lacking in competivitness or value.

          • 0 avatar
            redav

            Analysts’ reports I’ve heard believe that the recent uptick in their sales is likely temporary, and unless the way the businesses do business fundamentally change, they will regress back to where they were before.

            That assessment makes sense to me. If you always do what you’ve always done, you’ll always get what you’ve always got. I don’t know what FCA is doing differently than before, so it’s reasonable to think they will settle back to their ‘normal’ state.

          • 0 avatar
            danio3834

            What exactly is the ‘normal’ state for FCA? This is a completely new entity, with limited prior history in anything resembling it’s current form. So far, ‘normal’ for FCA has been steadily increasing sales and market share. With key new products positioned in the hottest segments, I’m not betting against growth in the near future.

          • 0 avatar
            VoGo

            Chaos = normal at FCA.

        • 0 avatar
          th009

          With the Ferrari money printing press spun off, the group will be dependent on Jeep, RAM and Maserati to fund the losses at the other brands.

          There is not much cash ($1.1B) coming into FCA from this, and it’ll hurt the ongoing cash flow. It may be a positive for current FCA shareholders (who will receive Ferrari shares) but it’s not a positive for FCA itself, which will lose $400M/year in Ferrari profits.

    • 0 avatar
      SayMyName

      Yep.

  • avatar
    Waterview

    One of the key questions: just how important is Formula 1 racing (and its $300 million+ estimated annual cost) to the development and sales success of its cars and merchandise? I have no idea how much sponsorship agreements and F1 prize money offsets the cost, but one would think we’ll get a very interesting “window” into these areas. Essentially, is Ferrari a racing team that also sells cars, or a car company that uses racing to assist in development and marketing. The answer could be surprising if the financial results aren’t there every quarter.

    • 0 avatar
      JMII

      Could they just buy up all their own shares and go private?

      I think it would great to see the numbers, but according to these articles:

      http://bleacherreport.com/articles/1955397-formula-1-prize-money-what-are-the-rewards-per-race-and-per-season

      http://autoweek.com/article/formula-one/formula-one-prize-money-accelerates-record-7518-million-some-teams-still-trouble

      It seems Ferrari gets a “special” deal. Which should come as no surprise to anyone who follows the sport. My guess is they break even… the insane money they spend in F1 is offset by the insane money F1 gives them for just showing up and finishing in the top 10. If you manage to finish in the top 3 = profit. Finishing 11th or worst however = bust. Thus the reason two teams will not make the next two GPs (US & Brazil).

    • 0 avatar
      RobertRyan

      Hard to distinguish , very closely linked, no equivalent US company exists

  • avatar
    Fred

    If they published a nice hard copy of their annual report I’d be interested in getting one share. Probably have a nice annual shareholders meeting in Italy as well.

  • avatar
    petezeiss

    Good move. I almost never see a Ferrari so they must suck.

  • avatar
    deanst

    What FCA needs is a merger with a firm who knows quality and how to build a decent car – is Mazda busy?

    • 0 avatar
      James2

      My first reaction is No, Hell No!

      But, assuming Mazda can keep an arm’s-length distance from Marchionne, FCA could use Mazda’s platforms for Alfa. Fiat is getting a version of the new Miata; the Mazda 3 might make for a nice, small Alfa, the 6 for a nice, mid-sized Alfa and the CX-5 for the CUV that every automaker seems to need. In turn, Mazda gets the volume it needs to survive in the future.

      • 0 avatar
        Lorenzo

        The problem is, Marchionne plans on staying another five years. He’s also set up FCA management so everybody answers to him. Once he’s gone, there’s no chain of command to fall back on. Unless you’ve studied management organization, you have no idea how many pitfalls are built into a change of leadership with that structure.

        Waiting five years might not be a good idea either – he could spin off Chrysler and Dodge, moving the minvans to Ram, spin off Maserati too, make Alfa the low volume premium car in Europe, and put Lancia out of its misery. Then he’ll have global Fiat and Jeep, and Ram and Jeep in North America as a cash cow. FCA becomes FJR, with the low profit NA cars eliminated.

        • 0 avatar
          petezeiss

          “Once he’s gone, there’s no chain of command to fall back on.”

          Wait till his subordinates learn how a papal conclave works.

          Cancel those vacation plans. The Interregnum of 2019-?

      • 0 avatar
        redav

        Even in such a scenario, don’t expect to see Mazda platforms used in Alfas. Marchionne wants Alfas to be Italian, so they won’t increase Mazda’s volume except maybe as profit though licensing fees, which won’t happen if they merge/are bought.

        As for quality, so much of it is about controls, culture, attitude, priorities, etc. If FCA has low quality, then it’s because they are doing things (design, manufacture, assembly, inspection, etc.) that cause quality to be low. It’s unreasonable to think that a small addition could change a larger company’s inertia.

        • 0 avatar
          Morea

          “Even in such a scenario, don’t expect to see Mazda platforms used in Alfas.”

          Mazda’s are also FWD except for the Miata. FCA has announced that all future Alfas will be RWD.

    • 0 avatar
      LectroByte

      Not sure that Mazda would bring anything to the table that FCA doesn’t already have, except maybe a Miata, such as it is. Mazada=warmed-over-Ford (badge job) from what we in East TN can see, and no heterosexual (in East TN that means everybody) I know would ever consider a Miata, much less a Fiat 500, assuming there was a dealer of such things within 200 miles of Bristol-by-God TN. Praise Jesus!

  • avatar
    TonyJZX

    Ferrari is a marketing company that seeks to license their name to Microsoft, Sony, Mattel, Panerai, Acer and whoever else will pay…

    they also run a F1 team on side and sell the 7000 six to seven figure supercars to the 1%

  • avatar
    NightA4

    Wonder if Maserati should go with Ferrari.

    Definitely fits better there, than with the Dodges and Jeeps

  • avatar
    Morea

    Here is a good write up describing how, despite this announcement, things are not expected to change at Ferrari:

    http://jalopnik.com/who-will-control-ferrari-now-1652197657

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