Does the end of FCA’s truck and popular SUV division mean no more Grand Cherokee Trackhawk?
This month is shaping up to be quite a good one for Fiat Chrysler, a lucky break after a period of hardship due to debt, sluggish (but growing) sales, and a looming diesel scandal. However, even with profits up a whopping 34%, Marchionne is still mulling over how to better run his company before he retires in 2018. According to the Detroit Free Press, the veteran auto executive may pull an old trick out of the bag, the spin-off, and use it on Jeep and Ram.
When asked if FCA’s Jeep and Ram brands could be spun off into a different standalone company either packaged together or unloaded separately, the man of many words simply said “yes.” If a spin-off were to take place, it would be a move that would cause great turbulence but is not out of the question for Marchionne, who has previously done the same with Ferrari and Fiat Industrial, a former agricultural manufacturing wing for the Fiat 500 maker. Both of those companies are currently traded on the New York stock exchange and are preforming well. Jeep and Ram, whether unloaded together or separately, could do just as well if not better, at least if Adam Jonas, the Morgan Stanley analyst who asked Marchionne the question, is right.
A previous analysis he conducted found that Jeep could be valued at $22 billion on its own legs while Ram’s worth could be as high as $11.2 billion. Interestingly enough, a spin-off could be a good way for Marchionne to accomplish one of his goals, reducing Fiat Chrysler’s load of responsibilities, which he previously tried to do by looking for another auto giant to merge with. Don’t panic just yet though because while he’s open to a spin-off, Marchionne also believes its too soon for that to happen. “And there is a point in time between now and the end of 2018 when I think we will be able to make a call about what the proper ownership of that asset is, and it may very well be that it is not within FCA," he said. The calendar is set and the clock is ticking.