Jeep's Probably Too Important to Spin Off, but Other Brands Could Get the Heave-ho: Report

Steph Willems
by Steph Willems

So, a Chinese automobile manufacturer, Great Wall Motors, would totally love it if Fiat Chrysler Automobiles flung the Jeep brand its way. Who wouldn’t? In the mid-1980s, Jeep was the ruby in AMC’s crown, and its new (and highly profitable) Cherokee line had Chrysler Corporation chairman Lee Iacocca salivating at the thought of where he could take the brand if given the chance.

Three decades later and Jeep is FCA’s biggest asset, not just due to current volume, but future volume in untapped markets. CEO Sergio Marchionne wants people the world over to drop what they’re doing and buy a Jeep. Having global Jeep models that are popular in numerous regions would act as a hedge against trouble in, say, North America, where its Chrysler, Dodge and Fiat brands aren’t exactly setting sales charts on fire.

Too big to spin off? Perhaps, but other brands in the FCA fold aren’t nearly as indispensable. With no corporate sugar daddy waiting in the wings with a checkbook, the automaker is reportedly considering spinning off a couple of brands, a new report claims.

According to sources who spoke to Bloomberg, Alfa Romeo and Maserati could be next to leave the family home and strike out on their own.

By jettisoning the two Italian luxury brands and its components division, FCA would better position itself as a volume-focused company, thus making itself more attractive to automakers that might come calling for a merger. Assuming all of the castoffs find buyers, FCA could net $14.2 billion from the sale.

Discussions among executives are ongoing, the sources claim, with a decision expected by early 2018.

Unlike Ferrari, which FCA officially gave up ownership of at the dawn of 2016, Maserati and Alfa Romeo likely wouldn’t end up as standalone, publicly traded entities. Neither brand has the same cachet as Ferrari. Still, if other automakers take up the challenge, FCA would unburden itself from pricey development costs. Maserati’s long-term plan calls for some form of electrification in each new model going forward, and Alfa finds itself struggling to meet the high sales expectations laid out by Marchionne in the not-too-distant past.

As for Jeep, the rugged brand’s $27 billion value tops that of its parent company.

“I don’t see how FCA could sell it,” industry analyst and consultant Maryann Keller told Bloomberg. “Whatever they got for it would hardly replace what they lost.”

The sources behind the spinoff scoop claim Marchionne wants to retain Jeep as the company’s breadwinner. The automaker predicts a 30-percent increase in global Jeep sales next year — a projection based on increased production in markets like Europe and Southeast Asia, as well as the growing traction of the global second-generation Compass SUV. The sky’s the limit for sales beyond that date, it seems.

With sales faltering at Chrysler and Dodge, and Fiat seemingly a lost cause in North America, the truck-only Ram brand probably wouldn’t be enough to keep FCA afloat. Compared to other companies, it certainly wouldn’t be much of a mass-market automaker.

[Image: Fiat Chrysler Automobiles]

Steph Willems
Steph Willems

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  • Garrett Garrett on Aug 24, 2017

    Sell Alfa Romeo to Jaguar-Land Rover. Maserati goes to a German car company - doesn't matter which one. Both brands end up with better vehicles.

  • BigOldChryslers BigOldChryslers on Aug 25, 2017

    Sergio should cut a deal to sell 20% ownership in FCA, with a put option in the contract which can force the other party to buy the remainder of FCA at some time in the future. Then run FCA into the ground so badly that the other party will pay to get out of the contract.

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