The idea is not new. Earlier this year it was rumored and the Fiat Chrysler Automobiles intention to sell its Alfa Romeo and Maserati brands. But now, he has received a boost by the news that some Chinese brands are trying to buy part of the business of Fiat.
Citing people familiar with the matter, Bloomberg is reporting that according to reports Alfa Romero rid of Maserati and allow the company to focus on mass market vehicles and be "more attractive compared to its competitors". The measure also help increase the value of the company, something the Agnelli family wants. Goldman Sachs Group Inc. estimated that Fiat Chrysler's business worth 50,000 million euros on their own, twice the current value of 24,500 million euros in the group.
The decision would not be taken until early next year and when carrying out transactions remains unclear, but reports suggest that Alfa Romeo and Maserati could be worth up to EUR 7,000 million, while one of its component brands, Magneti Marelli and other parts of the business are valued at up to 5,000 million euros, according to analysts.
He CEO of Fiat Chrysler Automobiles, Sergio Marchionne, 65, is preparing its five-year business plan before leaving the automaker in 2019. Separate parts of the group is a familiar tool for the executive. In 2011 the company was separated from the truck and tractor maker CNH Industrial NV and got rid of Ferrari in 2016. Together, the companies now have a market value of nearly 50,000 million euros, compared with just over 5,000 million euros in 2004, when Marchionne took over.
Under the proposal, Fiat Chrysler Automobiles intends to keep Jeep to anchor the car business mass market. So what Jeep has attracted the interest of China's Great Wall Motor Co. Exane BNP analysts Dominic O'Brien and Stuart Pearson explained that " Great Wall expressing a clear interest in all or part of Fiat Chrysler, the focus shifts from the potential gains to potential disintegration of brands. "
Risk of rupture
However, a breakout strategy carries considerable risks and Fiat's being evaluated. Alfa Romeo is in the early stages of its drive to become a global brand of luxury cars and still it needs thousands of millions of euros in investment to develop new models and compete with premium brands like BMW and Mercedes-Benz. And neither Maserati and Alfa Romeo have the appeal of the Ferrari brand. To offset these obstacles, Fiat may seek to secure a partner for its luxury brands.
The pressure to act is clear. Despite a rise of 34 percent this year, Fiat actions remain among the cheapest the Stoxx 600 Automobiles & Parts, trading at 4.6 times the estimated 12 months compared to the industry average of 7.4 times gain. For its part, the auto parts maker Faurecia, one of the competitors of Magneti Marelli, trades at 11.4 times estimated earnings, while BMW is in 7.2 times.
A break of Fiat would be another step in the plan billionaire Agnelli family to break away from a dependency on the volatile automotive business mass market. According to John Elkann, the head of the clan, the largest shareholder of Fiat has been trying to diversify its wealth through its holding company Exor NV. Elkann said Exor would be willing to reduce its stake of 24.5 percent in Fiat Chrysler Automobiles in an agreement to create a larger group.
Marchionne has been a proponent of consolidation, arguing that the industry spends money developing multiple versions of the same technology. These pressures have intensified only at a time when countries like France set a deadline for the end of combustion engines, and autonomous driving technologies and connectivity services threaten to alter the traditional business model of the automotive industry.
Fiat CEO acknowledged that the most profound changes could be coming last month when they assess whether to spin off some of its businesses he said. The company is pushing to eliminate 4,200 million euros of debt at the end of next year.