Will FCA Sell off Alfa Romeo and Maserati?
Some say it mightby Robert Moore, on
FCA isn’t in the best place right now. It’s been posting low profits, and as of the third quarter of 2016, it has close to $7-billion in debt. Combine this with the investigation of the Dodge Durango and Ram 1500 over roll-away complaints to go along with the airbag recall that affects more than a million vehicles, and it’s safe to assume there are at least a few executives sweating. While that’s not exactly good news for FCA, some reports are indicating that FCA may sell off Maserati, Alfa Romeo, and even Magneti Marelli help it dig itself out of the deep hole that it is in.
Of course, it isn’t all bad over at FCA. It does have its focus on SUVs and Crossovers, and as popular as those models are – especially here in the U.S. – that’s a huge positive for the brand, but whether or not that will be enough to start digging the company out of debt as yet to be seen. And, some market analysts like Evercore ISI recently changed the forecast for FCA from negative to positive, based on the thinking that the brand could sell off Alfa Romeo and Maserati. Berenbeg Bank thinks that Magneti Marelli should also be thrown into the mix.
Whether or not FCA will take this route to dig itself out of debt is still a mystery, but Sergio Marchionne promised the company would be nearly debt free and highly profitable when he retires in 2018. With the financial situation being what it is right now, he has a lot of work to do, and selling the brands mentioned above could be his ticket to success. Alexander Haissl, an analyst for Berenberg bank, says that Maserati could be worth anywhere between $3.6 and $4.8 Billion while Magneti Marelli could bring in an additional $2.3 to $3.7 billion. With those kinds of figures in mind, the brand could manage to attain anywhere between $6.5 billion and $8.5 billion, the former being enough to make the company almost debt free and the later enough to give it some extra capital.
Keep reading for the rest of the story
Why it Matters
The concept of FCA selling off Alfa Romeo and Magneti Marelli isn’t new. Rumors that FCA would sell Alfa have been circulating for a long time, but Marchionne thought the brand could be highly profitable and instead decided to revamp its lineup. One of the biggest fruits of the decision is the Alfa Romeo Giulia, and that could seriously help in the effect of selling off Alfa Romeo. And, let’s not forget that FCA was in talks with Samsung to sell of Magneti Marelli prior to the whole Note 7 disaster that tarnished Samsung’s name as bad as the Dieselgate scandal tarnished VW’s.
And then there’s Maserati, which hasn’t been rumored to be up for sale in recent months but would likely bring a considerable chunk of cash if FCA decided to put it on the market. Personally, having brands like Maserati and Alfa Romeo under the same umbrella seems like a bit much to me, so I wouldn’t be surprised to see it sold off first. For now, we’ll just have to wait and see, but Marchionne’s retirement is coming up quick, so the decision to sell any of the brands we’ve discussed needs to come sooner than later.
Read our full review on the Alfa Romeo Giulia Quadrifoglio here.