Marchionne confirms plans to spin off FCA parts division in 2018

03 October 2017

03 October 2017 Fiat Chrysler Automobiles (FCA) is to push ahead with a plan to spin out its parts business into a separate company next year, in an attempt to unlock value and make the manufacturer more attractive to partnerships. CEO Sergio Marchionne confirmed plans to list its Magneti Marelli business in 2018 at an event in Italy. He also added that it was too soon to spin-off the company’s Alfa Romeo and Maserati brands, a move which was considered to unlock more value and aid profitability of the core business. Marchionne suggested that this may not happen during the manufacturer’s next business plan, which runs from 2018 to 2022. The spun-out parts division could be worth as much as €5 million, and will allow FCA to focus on vehicle development at a time when car companies are being pushed to research new powertrains and methods of transportation for an electric and autonomous future. Marchionne said he is focusing on the Italian carmaker’s new five-year strategy, due to be unveiled early next year, which will address how FCA will deal with challenges stemming from new electric and self-driving technologies. However, the CEO admitted that the company had lost €17,000 a car on its electric version of its Fiat 500. ′Because of the time frame chosen in Europe, we have to electrify,’ Marchionne said in an interview. ′But if you tell me that this is the answer, I say no. The biggest fear that I see is that we will be left behind, we are a very slow industry; for us to make a decision takes forever.’ FCA has been under speculation for months over potential takeovers and the need to consolidate with another manufacturer. In August the Chinese brand Great Wall linked itself with a takeover of off-road brand Jeep, considered FCA’s ′jewel in the crown’ in terms of value, before interest faded, while recent news of a potential partnership with Hyundai has been dismissed as speculation. Meanwhile, Volkswagen (VW) has halted the possible sale of its Ducati motorcycle unit following opposition from its labour groups. The German manufacturer considered selling Ducati as part of a review of its assets as it looks to focus on car and truck markets. The move would also have unlocked funds to aid its growing financial penalties arising from the Dieselgate scandal. Ducati is owned by Audi, and the company has received several tentative bids, with one, the Benetton family’s investment vehicle Edizione Holding, valuing the motorbike maker at €1 billion. Photograph courtesy of FCA