As of January 1, the Italian industrial giant Fiat will be split into 2 companies: Fiat and Fiat Industrial, each with a new logo (above) and a more dedicated focus to their respective areas of expertise. For its part, Fiat will focus on the automotive industry, moving forward with a renewed focus on its core brands, which include Fiat, Alfa Romeo, Maserati, and Lancia. At the same time, the new board of Fiat Industrial will be able to focus on developing new “green” products for Iveco, Case New Holland, and Irisbus free of the (arguably) more volatile automotive arm.
So, what does this mean for the US and Europe?
Quite a bit, actually – especially if:
- you live and work in the United States’ auto industry,
- you’re a fan of Ferraris, and
- you own VW stock.
Spinning off the automotive arm of Fiat into its own entity makes a possible merger with Chrysler (which Fiat now has a 20% stake in) a much easier pitch for Fiat CEO Sergio Marchionne, who must get government approval for any official Chrsyler-Fiat merger. In recent weeks, Marchionne has admitted to wanting a bigger piece of Auburn Hills-based Chrysler, and is reportedly preparing Fiat-controlled supercar builder Ferrari for a quick sale or IPO in 2011, in a bid to purchase more Chrysler stock during the US-government mandated IPO of that company. Once Fiat buys enough of Chrysler to have a controlling share, they can simply force the merger, effectively buying a substantial foothold in the North American marketplace, while still hedging their bets in terms of branding and marketing.
I mentioned that this split would affect fans of Ferrari, and it’s clear that a sale of the brand would certainly be a change – but what does VW (my “no. 3” up there) have to do with any of this?
The global economy may or may not be looking up (depending on who you believe), but the reality is that the market for multi-billion-dollar supercar manufacturers with products offering sub-par fuel economy and an “anti-green” image is pretty soft (hybrid Ferraris notwithstanding). That said, the only real potential buyers for Ferrari are either the fledgling Chinese automakers or Germany’s Volkswagen, which has purchased supercar makers Bugatti, Lamborghini, and (most recently) Porsche – all while supplying engines to niche sportscar companies like Yes!, Fisker, and Spyker.
VW has the cash on-hand, and VW CEO Ferdinand Piech has an appetite for sporty cars. Expect some kind of announcement from VW or Fiat/Ferrari soon.