JEEP BECOMING A WORLD-DOMINATING MEGA-BRAND from kurplunk's blog

Over the past few weeks, Fiat Chrysler and Jeep have been in the news quite a bit. Sergio Marchionne, FCA’s CEO, is still in search of a merger partner, which could potentially mean spinning off Alfa Romeo and Maserati as a separate company. And while one Chinese automaker reportedly tried to buy the whole company recently, that offer was apparently too low. And at the center of many of these deals is one brand—Jeep. Why? Because it could easily be a major automaker all on its own.

Bloomberg reports that in the next year, FCA expects Jeep sales to increase 30 percent worldwide, approximately 2 million units in total. That’s up significantly compared to its approximately 300,000 deliveries in 2009. But Marchionne has told analysts he eventually sees that number more than tripling, with Jeep potentially selling as many as 7 million vehicles a year. For comparison, Ford delivered approximately 6.7 million units globally in 2016.

Assuming that Jeep’s growth continues to the point it’s able to meet Marchionne’s projections, that would make it one of the biggest brands in the world. Even now, one analyst recently said Jeep is potentially more valuable than all of FCA. No wonder other automakers have shown interest. But according to analyst Maryann Keller, selling Jeep is the last thing FCA needs to do.

“I don’t see how FCA could sell it,” Keller told Bloomberg. “Whatever they got for it would hardly replace what they lost.”

Marchionne seems to be aware that if FCA were to sell Jeep, the remaining company would likely be much less attractive to other potential merger partners. “We do need to worry about the stump that’s left behind,” Marchionne said on a recent earnings call. “If we start picking away all the things that appear to be interesting to people, then I think we’re going to end up with a sub-optimal business that cannot run.”

Source: Bloomberg