Fiat Chrysler Mulls Unit Spinoffs Under Marchionne's Final Plan

  • Magneti Marelli, Alfa Romeo possible candidates for split: CEO
  • CEO seeks ‘zero involvement’ in carmaker after 2019 retirement

Fiat Chrysler Automobiles NV will evaluate whether to separate from some of its businesses in a strategy that Chief Executive Officer Sergio Marchionne will unveil in early 2018 as his last major project for the carmaker.

“The spinoff story is not over at Fiat Chrysler,” Marchionne told analysts Thursday on a conference call after the Italian-American carmaker reported a 16 percent increase in second-quarter earnings. “We have an obligation to purify that portfolio.” The CEO said he’ll present a five-year business plan through 2022 in the first half of next year. He reiterated that he’ll step down in 2019 and then have “zero involvement” in running the company.

Marchionne, 65, has dropped a years-long search for a merger in favor of focusing on eliminating Fiat Chrysler’s debt by the end of next year. The manufacturer’s previous spinoffs to shareholders have included supercar maker Ferrari NV and the truck and tractor producer now called CNH Industrial NV. A possible candidate for a deal is auto-parts unit Magneti Marelli, and there’s no “industrial restriction” on eventually separating Italian luxury brands Alfa Romeo and, less likely, Maserati, the CEO said Thursday.

Fiat Chrysler’s lineup shift to sport utility vehicles helped it weather a fading U.S. auto market to boost second-quarter adjusted earnings before interest and taxes to 1.9 billion euros ($2.2 billion). Maserati’s earnings surged fourfold, propelled by demand for the Levante SUV. A 40 percent profit jump for the company’s mass-market brands in Europe more than made up for a 1.7 percent decline in North America that stemmed partly from retooling factories for new models, according to figures published Thursday.

Maserati Levante.

Photographer: Jason Alden/Bloomberg

Marchionne’s strategy of emphasizing more-lucrative SUVs over sedans and hatchbacks is gaining traction in his push to make Fiat Chrysler a more attractive merger partner before he retires. In addition to expanding the SUV-focused Jeep brand, Fiat Chrysler has added the Stelvio to the Alfa Romeo division’s lineup, with the model now entering the U.S.

Maserati cars will be offered with electrified powertrains after 2019, Marchionne said. Jeep deliveries may eventually rise to as many as 7 million SUVs annually, he said. That compares with 2 million targeted for 2018.

Net industrial debt narrowed to 4.23 billion euros at the end of June from 5.11 billion euros on March 31, the company said. Fiat Chrysler stuck to a target for the figure to decline to less than 2.5 billion euros at the end of 2017.

    Before it's here, it's on the Bloomberg Terminal.