MILAN (Bloomberg) -- Sergio Marchionne, the architect of the auto industry's biggest deal in more than a decade, may not be finished yet. Even as he completed the merger of Fiat and its U.S. Chrysler unit last year to create Fiat Chrysler Automobiles, Marchionne said the industry is still fragmented and ripe for further consolidation.
His planned spinoff of Ferrari this year puts the $14 billion automaker into position for another combination that could form a group to vie with global No. 1 Toyota Motor Corp. or help address shortcomings in Asia.
Manufacturers are under pressure to join forces amid slowing growth and rising costs to develop cleaner cars and add automated driving functions and smartphone-like technology. By lowering debt with the cash raised from cutting loose Ferrari, Fiat Chrysler becomes a more attractive partner. The spinoff also gives Marchionne more leeway to set up a transaction by ensuring the Agnelli family, Fiat Chrysler's biggest shareholder, retains control over Ferrari.
While the Agnellis want to keep Ferrari, they would probably be "open to strategic combinations that will reduce, or eliminate, their stake" in Fiat Chrysler, said Max Warburton, an analyst with Sanford C. Bernstein & Co.
Volkswagen Group, Ford Motor Co. and General Motors Co. all fit criteria that Marchionne outlined last year for a suitable partner, while Mazda Motor Corp. and Suzuki Motor Corp. could be viable Asian merger candidates, analysts and investors said.
"There's room for megadeals in the car industry in the medium term as carmakers will be forced to share development costs," said Stefano Aversa, managing director of strategy consultancy AlixPartners. "No carmaker can sustain the investment needed alone, not even the biggest ones."
By announcing the Ferrari spinoff just days after completing the Fiat-Chrysler merger in October, Marchionne, a self-proclaimed corporate "fixer," signaled he may be open to another deal down the road. With the 62-year-old CEO planning to stay at the helm to complete a strategic plan that runs to 2018, he's still got time to consider a transaction.
"I've always had the view that this industry over the middle to long term needs to look at other consolidation opportunities," Marchionne said in November after speaking at an event at Fiat's test track in Balocco, Italy, where the CEO is known to take his own Ferraris on high-speed jaunts. "Eventually it must happen."
The spinoff of Ferrari is part of Fiat Chrysler's efforts to raise about $5 billion to cut debt. The company also issued shares and convertible bonds last month.