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DATE News (chronologically)
01/05/12
automotive
f1
Ferrari racing towards an IPO?  Ferrari boss Luca di Montezemolo and Sergio Marchionne, the boss of Ferrari’s parent company Fiat, have consistently said that the Maranello luxury sports car business is not for sale. Marchionne has, however, conceded that he knows that if he needs more cash, he can always go to the markets with Ferrari shares.

That may need to happen. In recent days Fiat has pushed up its share in the Chrysler Corporation up to 58.5 percent, the additional five percent being granted as a result of a deal with the US government which saw Fiat agree to produce a car in the US that would be capable of achieving 40 miles per gallon, in exchange for the extra shares. The result is the Chrysler Dart, which is based on the Alfa Romeo Giulietta platform. The extra shares were previously owned by a United Auto Workers trust fund, which pays for the company’s retiree health care. This organization still owns 41.5 percent of Chrysler shares, but is likely to offer some of these to the public in the near future, in order to give it more cash.

Marchionne is still aiming to push the Fiat-Chrysler alliance to become the third biggest car manufacturer in the world, with sales of six million cars a year by 2014. The downturn in the economy in Europe means that this target is going to be missed – unless Fiat can acquire another company, which it cannot afford to do at the moment, as it is still completing the Chrysler deal. The stock markets are skeptical. Fiat shares have lost half their value in 2011.

The company is weakest in Asia and an alliance with an Asian car company makes sense, although raising the money to do that is not going to be easy. One way that Fiat could increase its liquidity is to sell off shares in Ferrari, which is estimated to be worth around $5 billion. Fiat will not wish to lose control of the business, but could still sell 40 percent of the shares, without drama. This would net something in the region of $2 billion, which could go a long way towards sorting out Fiat’s debts and expanding in Asia.

Ferrari continues to go from strength to strength with 2011 sales expected to be a new record. The company was aiming for sales of 7,000 cars, an increase over 2010′s 6,500, which produced a profit of $420 million. The United States remains the biggest market with around 28 percent of the sales. China is now the second biggest market but it is a long way behind the US figures.

The globalization of Formula 1 in recent years has helped Ferrari to increase its sales around the world and the news F1 is going back to the United States later this year should help boost US sales still further. Ferrari boss Luca di Montezemolo and Sergio Marchionne, the boss of Ferrari’s parent company Fiat, have consistently said that the Maranello luxury sports car business is not for sale. Marchionne has, however, conceded that he knows that if he needs more cash, he can always go to the markets with Ferrari shares.

That may need to happen. In recent days Fiat has pushed up its share in the Chrysler Corporation up to 58.5 percent, the additional five percent being granted as a result of a deal with the US government which saw Fiat agree to produce a car in the US that would be capable of achieving 40 miles per gallon, in exchange for the extra shares. The result is the Chrysler Dart, which is based on the Alfa Romeo Giulietta platform. The extra shares were previously owned by a United Auto Workers trust fund, which pays for the company’s retiree health care. This organization still owns 41.5 percent of Chrysler shares, but is likely to offer some of these to the public in the near future, in order to give it more cash.

Marchionne is still aiming to push the Fiat-Chrysler alliance to become the third biggest car manufacturer in the world, with sales of six million cars a year by 2014. The downturn in the economy in Europe means that this target is going to be missed – unless Fiat can acquire another company, which it cannot afford to do at the moment, as it is still completing the Chrysler deal. The stock markets are skeptical. Fiat shares have lost half their value in 2011.

The company is weakest in Asia and an alliance with an Asian car company makes sense, although raising the money to do that is not going to be easy. One way that Fiat could increase its liquidity is to sell off shares in Ferrari, which is estimated to be worth around $5 billion. Fiat will not wish to lose control of the business, but could still sell 40 percent of the shares, without drama. This would net something in the region of $2 billion, which could go a long way towards sorting out Fiat’s debts and expanding in Asia.

Ferrari continues to go from strength to strength with 2011 sales expected to be a new record. The company was aiming for sales of 7,000 cars, an increase over 2010′s 6,500, which produced a profit of $420 million. The United States remains the biggest market with around 28 percent of the sales. China is now the second biggest market but it is a long way behind the US figures.

The globalization of Formula 1 in recent years has helped Ferrari to increase its sales around the world and the news F1 is going back to the United States later this year should help boost US sales still further. Joe Saward

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