According to Fiat CEO Sergio Marchionne, Fiat may sell off part of its Ferrari stake before its merger of Chrysler into the group. The move may seem counterintuitive, divesting part of one of the world's most iconic brands for the sake of one of the world's most troubled, but Marchionne explains the reasoning behind it.

More cash on hand is the root of the idea, as a Ferrari IPO could raise as much as $1.6 billion for the company, assuming a valuation of $3.3 billion and sale of half of Fiat's interest in the company, reports Automotive News. The additional cash would help the Fiat-Chrysler merger along, though Fiat must still meet certain milestones before it will be allowed to acquire a larger holding of Chrysler stock: first, building the 1.4-liter Multiair engine in Michigan; second, bringing the new Compact-Wide platform Fiat-based Dodge sedan to the U.S. Once complete, Fiat will have the option to increase its holding in Chrysler up to 35 percent from the current 20.

Beyond the implications for the Chrysler-Fiat merger, however, an IPO for Ferrari could invite competitors such as the Volkswagen Group to make their move. VW has been eyeballing a stake in several Fiat brands for some time now, according to various reports. The IPO could present the perfect opportunity.

We'll keep you posted as the situation develops, complete with our best analysis on what this may mean for the future of both Fiat/Chrysler and Ferrari.

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