By on August 24, 2017

All-new 2017 Jeep® Compass Limited - Image: Jeep

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]

Get the latest TTAC e-Newsletter!

Recommended

46 Comments on “Jeep’s Probably Too Important to Spin Off, but Other Brands Could Get the Heave-ho: Report...”


  • avatar
    JimZ

    So they waste all of that money trying to resurrect Alfa Romeo, only to ditch it?

    the inmates are running the asylum.

    • 0 avatar
      PrincipalDan

      Sunk cost fallacy. Just cause you put a ton of money into it doesn’t mean it’s not a liability.

      But I do agree with your point that Sergio is so egotistical that he thinks he can make Alfa Romeo and Fiat strong global brands.

      • 0 avatar
        Scoutdude

        The problem is that the Alfa Platform is the basis for the Dodge Dart and Chrysler 200, oh yeah they already canned those. However the rumors have been that the replacement for the LX cars will be based on a Alfa platform.

    • 0 avatar
      MGV001

      Makes sense to me. Why else would they spend money on a dead brand? So they would have something to sell.

  • avatar

    Like the earlier article title today, perhaps FCA is learning when to fold ’em with regard to Alfa and Maserati.

    Both are money pits, with Maserati having perhaps a modicum of sustainability if they get into SUVs. But it’ll still require separate RWD platforms, likely too expensive (or inapplicable) to use in other brands in the FCA portfolio.

    Alfa is a lost cause, and will forever be a struggling, tiny entity until it is shuttered or turned into a trim level.

    Dump them both. Maserati is the medium-quality but small hamburger, and Alfa is the coleslaw you get on the side for free.

  • avatar
    psarhjinian

    “caché”

    I think you mean “cachet”

    • 0 avatar
      bking12762

      psarhjinian-Thank you for the education. You are correct. But we all know what he meant. I don’t come to this website to get my daily grammar lesson. I do enjoy well written comments, but jeesh, do we have to call out every error in the comments portion. Errors in the article are another story….

    • 0 avatar
      BigOldChryslers

      It looks as though the article was already corrected before I read it, but +1 Psar. Using cache or caché in place of cachet is a pet peeve of mine as well, and I’ve resisted the urge to point this out on numerous occasions.

  • avatar
    seth1065

    Alfa cash drains are a sunk cost , much like opel and GM it comes a time to walk away, I doubt anyone would buy alfa and the trident for any where near their worth ( 14.2 Billion that must be wrong) but if someone wants them have at it, maybe Fiat could be sold off to Tata maybe and I am sure someone would buy Ram. Without Jeep there is really no FCA much like w o Jeep there is no AMC left.

  • avatar
    dal20402

    It would clarify a lot if FCA renamed itself Jeep And Stuff Motors.

  • avatar
    Syke

    I’m always amused with Jeep’s reputation of bouncing from one automotive company to another (Willys, Kaiser, AMC, Chrysler, FCA) and supposedly dragging the company down into oblivion – when the reality is that companies well on their way to oblivion have latched on to Jeep as a last gasp effort to save their corporate hides.

    AMC may have been the closest to succeeding in that effort. At least they got bought out while still functioning.

    • 0 avatar
      Scoutdude

      The reality is that most of those automakers would have been better off focusing their resources on improving their existing business instead of wasting them on Jeep. Chrysler is the only one that did OK by having Jeep in their portfolio. They were still functioning when the merger of equals happened and were not at death’s door. AMC did not fare well at all as they ended up being taken over by Renault to avoid bankruptcy.

      • 0 avatar
        Lorenzo

        True, Chrysler was making billion$ in profits at the takeover of equals, and had over $10 billion for new models in the bank, but it wasn’t Jeep making that for them, it was the Neon, cloud cars, and LH models, along with the vans.

        Chrysler wasn’t in trouble at all – it was Lee Iacocca who chose Bob Eaton, the GM lifer who sold out the company, over Maximum Bob Lutz. Iacocca admitted choosing the wrong Bob was his worst mistake, but it’s too late now.

    • 0 avatar
      rpol35

      Yeah, sort of like the Hope Diamond of car companies. It just pushes the weak ones over the cliff and lives on for another day.

  • avatar
    ajla

    The 7 year plan:

    1. Jeep is sold to a Chinese company.
    2. The Italians that can go over to Ferrari.
    3. The Maserati, Alfa, Dodge, and Chrysler IP stays with the Ferrari diaspora, but those brands stop producing vehicles.
    4. Fiat pulls out of the US and Canada but stays in production for other global markets.
    5. Cummins contract goes to Nissan.
    6. Ram goes to Hyundai (why not?).

  • avatar
    Fred

    OK let’s pretend I’m a Chinese auto manufacturer wanting to move beyond my borders. What about Fiat? I’d have to be sure the Italian govt and union aren’t going interfere. Would be nice to get a hold of some Alfa/Maserati engine tech because I want to resurect some kind of Dino. I doubt Sergio is going to give up Ferrari. I get some factories and US dealers, maybe access to Italian design houses. I’m sure there is a boat load of debt to restructure. But, that can all be negogiated. Of course now you know why I’m not a fat CEO.

    • 0 avatar
      Scoutdude

      Great Wall has no interest in the Fiat, Chrysler, Dodge, Maser and Alfa brands, maybe they have a small interest in Ram, but it is all about Jeep plus they already separated Ferrari so it is no longer part of FCA in the strictest sense.

  • avatar
    Tstag

    He danger is that FCA effectively ends up just becoming Chrysler again. That didn’t work last time and it won’t work now. So if they do sell Alfa and Maserati then they still need to align themselves with a volume car maker.

    The most obvious partner is VW. VW have the volume is Europe and merging with FCA would give them volume in the USA and Latin America.

    PSA alternatively would give FCA better volumes in Europe.

    TATA would give them volume in India and a premium automotive group in JLR which could help Alfa and Maserati.

    There are plenty of possible partners but FCA need to wrap a deal up that doesn’t involve them becoming just Chrysler again.

    • 0 avatar
      dwford

      The old Chrysler brands are in worse shape than ever since neither Chrysler or Dodge has any sort of lineup. Both have been completely decimated.

    • 0 avatar
      JDG1980

      The reason that Chrysler “didn’t work last time” was because they got simultaneously hit by a recession and high gas prices, *and* had massive fixed legacy costs. This last one is important; it’s no coincidence that the other Detroit manufacturers, and only the Detroit manufacturers, had similar woes at the same time. GM, of course, went into bankruptcy; and Ford made it through by the skin of its teeth, via a combination of luck and skill.

      The legacy costs are mostly gone now, and the rise of fracking and slowing of growth in China means that high gas prices are probably a thing of the past. There’s no reason why a renewed focus on the classic Chrysler brands wouldn’t work. All of FCA’s profits come from America as it is, and they sure aren’t coming from Fiat 500s.

      (BTW, it took about six logins on 2 separate browsers to post this. It isn’t the first time something like this has happened, either. Fix the comments!)

      • 0 avatar
        rpol35

        Cerberus ownership (2007-2009) didn’t help either. They are in the strip & flip business but got bit hard after the strip but before the flip.

        • 0 avatar
          JonBoy470

          Chrysler went off the rails when they “merged” with Daimler. That merger was a naked cash grab that starved Chrysler of capital and development resources. Chrysler was necrotic, with a product line built of Daimler hand-me-downs, by the time the Germans cut bait.

  • avatar
    dwford

    My local Dodge/Chrysler/Jeep/Ram dealership has radio ads running now advertising themselves as only a Jeep/RAM dealership, so that tells you something.

    Sergio is wildly impatient, and really not fit to run an automaker where product cycles are so extended. He gave the poor Dart and 200 about 2 model years before trashing them publicly and cancelling them, and now Alfa has only been selling the Giulia for about 8 months, and he is already impatient and ready to quit. Maybe if he actually followed through on any of the many plans he has concocted, he’d see some success.

    There is virtually no brand equity or identity in Fiat or Chrysler anywhere in the world. They need to be dropped. Dodge has an all American sporty image, and could easily be turned into a full line brand again. Alfa has a similar sporty image with European flair and could easily become a full line luxury brand. People WANT to like Alfa. They’ve just never been given a reason to. Jeep is Jeep.

    FCA needs to drop Fiat and Chrysler, fold Ram back into Dodge, and sell Maserati to Ferrari so they don’t have to try and sell Ferrari SUVs. Surely Ferrari would love the economies of scale that could come with being paired up with a slightly more mass market brand, and Maserati could only benefit from being tied to Ferrari instead of tied to FCA.

    Dodge and Alfa can share FWD and RWD/AWD chassis, with a focus on on road crossovers. Jeep can keep it’s full off road capability and go up to target Range Rover as well.

    • 0 avatar
      75brick

      This right here makes a lot of sense… Which means Sergio would never listen to it.

    • 0 avatar
      seth1065

      dwford,
      your plan kills off Chrysler and Fiat, I doubt the unions in Italy as well as the Italian Gov will like that, the Mini van I assume becomes a dodge minivan or are you dumping it all together? Maybe the Maserati plan may work, but your dodge and alfa plan is missing only little thing CASH CASH CASH to develop a full car line , not to mention when gas goes up your beyond screwed. FCA does not have the cash to develop full car lines, they are robbing Peter to pay Paul now so they need a bail out from some cash rich more than likely Asian buyer.

      • 0 avatar
        dal20402

        I think if I were Cynical Sergio I’d do this:

        1) Put golden parachute in place
        2) Sell Jeep, Ram, and the rights to the Pacifica to the highest bidder
        3) Quit and take the money
        4) New management will have no option but to throw the keys of the FCA rump onto the Italian government’s desk (that is, start bankruptcy proceedings in Italy and let the government decide if it wants a bailout).

        Sergio seems to want to merge the whole automaker rather than holding a fire sale, and it’s going to be hard to find anyone interested. Fiat, Alfa, Maserati, Chrysler (with the sole exception of the Pacifica), and even Dodge are all dumpster fires.

      • 0 avatar
        JDG1980

        A “full car line” is no longer needed. Standard passenger cars are quickly becoming a niche product. The LX-platform cars do well in their niches; there would be no point in making a crappy compact or midsize sedan that no one wanted to buy. The 200 and Dart should never have been produced.

        And gas won’t go back up, at least not to its previous levels. Fracking broke OPEC for good, and on top of that the $4-$5/gallon prices were based on inflated expectations of future Chinese growth which have since been debunked.

        The truth is that, shorn of legacy costs, the traditional Chrysler brands can operate indefinitely with a lineup consisting of 75-90% light trucks. If CAFE becomes an issue, just pay the fine as a cost of doing business.

        • 0 avatar
          bikegoesbaa

          “there would be no point in making a crappy compact or midsize sedan that no one wanted to buy”

          They also have the option of making compact or midsize cars but *not* making them crappy. Other automakers do this with considerable success.

          Or are you saying that it would inevitably be crappy because of Chrysler involvement?

    • 0 avatar
      JonBoy470

      The Dart was conceived for the sole purpose of securing approval for the merger from the Obama administration, which had made it very clear such approval was predicated on the introduction of a 40 mpg CAFE car in an unrealistically short timeframe. The Dart was a stop-gap, slapped together from the Fiat/Alfa parts bin. In their haste to launch the Dart, and inexperienced in the US market, Fiat screwed up the Dart’s launch with poorly packaged options, including the notable fact there were virtually no automatic models during the critical first 3 or 4 months the car was in the market.

  • avatar
    87 Morgan

    How many times do we have to see the same movie? Too many brands sink the parent company. GM tried it, made it work for awhile, dumped it. Ford, same thing. Toyota same. Nissan and Honda seemingly are the only smart ones when it comes to this desire to have multiple companies selling essentially the same car always BK’s the parent.

    FCA: Fiat, Alpha-Romeo, Ram, Dodge, Jeep, Chrysler, Maserati.

    1. The first two have no business being the US market in the first place. Just quietly fire sale the remaining inventory, take down the signs, & apologize to the dealers who foolishly built a stand alone building to sell their Italian garbage.
    2. Sell Maserati to Ferrari or anyone else for that matter. Their is zero reason for FCA to be in this market. It is not profitable for them and takes up resources that are desperately needed elsewhere.
    3. Ram: what a stupid idea this was in the first place. People like Dodge, I liked, scratch that, loved my Dodge Diesel 2500. Fold this back into Dodge and fire the a-hole who came up with the idea in the first place, oh and the other one that decided to put RAM in chrome on the tailgate the size of a billboard.
    Now: back to where it all started. Chrysler, Jeep, Dodge or CDJ stores as we used to call them.
    People like Dodge trucks, people like Jeeps, and some like Chrysler minivans. Stop trying to outkick your coverage and things will work out fine. People don’t like Fiats or Alpha’s. We say we like the Alpha, we just won’t buy it. Safer to roll the dice on a 5 series.

    • 0 avatar
      JDG1980

      I never understood Sergio’s brand strategy. Bringing Fiat to the American market was a bad idea from the start; the brand had negative equity to begin with (“Fix it again, Tony”), and its subsequent record has done absolutely nothing to dispel these public preconceptions. Splitting off Ram from Dodge made little sense – they’re sold at the same dealership either way, and FCA had too many brands, not too few.

      What *should* have happened at the Fiat acquisition of Chrysler was reducing the U.S. presence to two brands: Dodge and Jeep. The Chrysler 300 was about the only worthwhile distinct vehicle the brand had at that time, and it could easily be rebadged to Dodge Dynasty. If FCA absolutely needed the small Fiats during the period of high gas prices, then rebadge the 500 to, I don’t know, Dodge Desperado or something. It would be easier to discontinue them in the U.S. market when sales slowed if there wasn’t a whole dealer network devoted to the terrible little things. The pickup trucks would, of course, remain under the Dodge brand where they were all along. Bringing back Alfa Romeo was a fool’s errand and should never have been tried; that money should have gone to refreshes for the profitable pickups and Jeeps. Maybe spend some cash on bringing over the Fiat Strada, which would make a fine new Dodge Rampage.

      • 0 avatar
        87 Morgan

        You are probably correct to phase out Chrysler as well. I guess I am thinking of the primary market, which is the minivan/pacifica. Both can be a Dodge and/or have been, but have commanded a higher price point.

        I find the whole business of Fiat and Alpha, Fiat especially, shocking. You made a great point with the fix it again Tony; I can only assume they did zero market research analysis prior to making the decision. Seems to me with a small amount of market analysis dollars they would have realized what an uphill climb they had. Or not, it may be that Sergio is just that aloof and thought that America will buy his shoddy products.

    • 0 avatar
      CoastieLenn

      RAM becoming a separate entity might have been a smart move. Without the Ram trucks, Dodge is a withering leaf, waiting to fall off the tree. The Charger/Challenger will not sustain an entire brand. In the event that the LX platform goes by the wayside, likely too will those two cars. There’s no platform that Dodge has that can support the dimensions and structural requirements of those cars, especially in Hellcat trim with any reliability. An entirely new chassis would need to be developed.

      What I’m getting at is that maybe the writing for this was on the wall well before the mass public knew about it and transferring the trucks to their own brand was a way to save them as remaining profitable in the unfortunate event of having to shutter the Dodge brand.

      • 0 avatar
        TMA1

        I thought that at the time Ram was spun off, it was a foregone conclusion that Dodge would be terminated in a few years. Remember, they also spun off the Viper to a different standalone brand – SRT. And when FCA realized no one understood the purpose behind SRT, the Viper quietly became a Dodge again. There’s no reason Ram couldn’t do the same.

      • 0 avatar
        87 Morgan

        I guess my thoughts are too many brands sink the ship. The Dodge brand is not now nor was it at the time of the re-branding of Dodge Ram pickups to Ram pickups broken, in fact most likely the Dodge brand itself had the 2nd highest value of the company next to Jeep. And now, we are contemplating killing off the brand altogether?

        Dodge has been around forever, why go through the cost of a making a new brand that is solely dedicated to trucks? Dodge Ram pickups work, just like Dodge Challenger works. Ram as a stand alone ensures that Dodge is no longer needed and/or supported. But the why diminish the value of Dodge in first place?

        The introduction of the extra brands: RAM, Fiat, Alpha to the US market have diluted the core and perhaps endangered the existence of entire entity. That in and of itself is shameful at best and evidence of gross negligence and stupidity at worst.

  • avatar
    Garrett

    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.

  • avatar
    BigOldChryslers

    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.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • Old_WRX: Lie2me, “Here’s another question you won’t answer, what degree do you have from what...
  • CaddyDaddy: Amen to that. Please see recent video with youths regarding the meaning of the 4th of July. With the shut...
  • Lie2me: Here’s another question you won’t answer, what degree do you have from what college/university?
  • Lie2me: Yes, Boris, let’s eliminate the schools that way Americans will be as dumb as the Russians and so much...
  • Jeff S: If you are looking for a midsize diesel pickup in the US then its a Colorado or Canyon.

New Car Research

Get a Free Dealer Quote

Who We Are

  • Matthew Guy
  • Timothy Cain
  • Adam Tonge
  • Bozi Tatarevic
  • Chris Tonn
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber