Marchionne intends to spin off Jeep and Ram brands to form independent companies

According to foreign media reports, FCA CEO Sergio Marchionne gave a bombshell in an interview with Morgan Stanley on April 27, 2017 (this Wednesday). When he was asked whether FCA would divest its Jeep and Ram brands together or separately, or establish an independent company after the divestiture, his answer was only two words - "yes", which was really unexpected.

FCA announced that its profit in the first quarter of this year was as high as $698.2 million, a sharp increase of 34% over the same period last year, mainly due to the profitability of its European business, and the profitability of the Maserati brand also played an important role. FCA's global revenue increased by 4% year-on-year to $30.2 billion. On Wednesday, FCA's stock price soared, closing at $11.65 per share, up $1.11 per share from the previous trading day, an increase of 10.5%.

The news that FCA will sell its Jeep and Ram brands is shocking to its employees and other stakeholders, but it is not a big deal to Marchionne, the CEO of FCA, who is known for his deep thoughts and elusiveness, not to mention that he has led many corporate mergers and acquisitions and corporate (asset) divestitures.

In 2009, he personally managed the merger of Fiat and Chrysler, which lasted for five years. In 2014, the two automakers merged into one, becoming the world-renowned automaker FCA. On the road to corporate advancement, Marchionne split Fiat and Fiat Industrial into two independent companies in 2011. Fiat is mainly responsible for the production of passenger cars, including Lancia, Alfa Romeo and Chrysler, while Fiat Industrial mainly produces agricultural vehicles and agricultural machinery.

In 2016, Marchionne spun off Ferrari from FCA to make it an independent company. Today, Ferrari is also listed on the New York Stock Exchange, with a share price of $75, and its annual revenue and net income are $3.4 billion and $435 million respectively.

Adam Jonas, an analyst at Morgan Stanley, asked Marchionne in an interview whether he would spin off Jeep and Ram from FCA and make them independent companies. After receiving a positive response from Marchionne, he did not dwell on the issue and instead discussed other topics with Marchionne.

This is not the first time Jonas has raised this question. In January this year, Jonas estimated that the market value of the Jeep brand alone was as high as $22 billion, far higher than the capitalization of FCA at the time. In recent years, the Jeep brand has grown rapidly, with sales of 500,000 vehicles in 2008 and 1.4 million vehicles last year.

Jonas also assessed the market value of Ram and Maserati, giving valuations of $11.2 billion and $3.5 billion respectively. He also assessed the market value of the two major parts business units, Magnetti Marelli and Teskid, with a total valuation of approximately $3.5 billion.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.