Jeep Brand Worth More Than FCA, Report Suggests
Morgan Stanley analyst says Jeep strong enough to stand aloneby Mark McNabb, on
There’s no question the Jeep Brand is doing extremely well. But, according to Adam Jonas, a Wall Street analyst with Morgan Stanley, Jeep is more valuable than the rest of Fiat Chrysler Automobiles. Jonas conducted a sum-of-the-parts analysis that concluded Jeep’s value is 120 percent of FCA’s $23.6-billion market capitalization. That’s a huge deal for a sub-brand of a global automaker. What’s more, Jonas estimates Jeep could account for nearly half of FCA’s total vehicle sales by 2018.
Of course, Jeep’s upcoming 2018 Wrangler JL and the Wrangler Pickup likely contribute to Jonas’ optimistic estimates, but even currently, Jeep has seen tremendous growth since 2009 when Fiat took control of Chrysler. CNBC reports Jeep sold 1.4 million vehicles worldwide in 2016, which is four times its sales volume in 2009. New models like the Renegade and Cherokee are undoubtedly contributing thanks to the boom in popularity for the crossover segment. However, Jeep’s success could mean big bucks for FCA and its shareholders if the brand is sold or spun off. FCA has already done this with Ferrari with great success. FCA’s market cap was listed between $15 and $16 billion before the Ferrari spin-off in late 2015, according to CNBC. Since then, FCA and Ferrari now have a combined market cap over $31 billion. When Jonas asked FCA boss Sergio Marchionne if he would consider spinning of the Jeep brand, Marchionne reportedly said, “yes.” However, no plans have been made public by FCA or its executives. What does this mean for Jeep? Keep reading for more.
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Will Jeep Get Spun Off?
It’s impossible to know for sure without official word from FCA, but Adam Jonas, the Morgan Stanley analyst, suggests FCA CEO Sergio Marchionne will likely leave FCA in 2018 to devote his time fully to Ferrari, of which he is already CEO and Chairman. In response, Jonas says, Jeep could become its own brand with a majority of ownership held by shareholders. The result would likely be bigger profits for Jeep and better earnings for investors. Jeep’s relationship to other FCA brands, especially Mopar, is still unknown.
Regardless of what happens to the business end of Jeep, the brand will almost certainly continue its growth – that is, as long as fuel prices remain low. New products combined with its worldwide recognition and vast aftermarket support put Jeep in a very healthy position as the new decade approaches.
Jeep Trackhawk - Behind the Wheel
Read our speculative review on the upcoming 2018 Jeep Wrangler.
Read our speculative review on the upcoming 2018 Jeep Wrangler Pickup.