Fiat Chrysler has announced plans to spin off sports car maker Ferrari into a separate company.

The company said in a statement that spinning off Ferrari was part of a plan to raise capital to support the future growth of newly merged Fiat Chrysler Automobiles.

Fiat Chrysler chief executive Sergio Marchionne said in a statement that it was "proper that we pursue separate paths for FCA and Ferrari" after the completion of the merger of Chrysler and Fiat with a listing on the New York Stock Exchange earlier this month.

The move aims to unlock the luxury brand's value and distinguish it from its mass-market parent.

The spin-off aims to raise money to support plans to invest 48 billion euros (£38 billion) over five years to compete with global giants Toyota and Volkswagen. Shares in Fiat Chrysler soared on the news.

Mr Marchionne said: "I think we are doing the right thing by giving Ferrari a proper, unique place in the capital markets to be evaluated and valued as a luxury auto maker."

Fiat Chrysler, which owns 90% of Ferrari, will sell 10% of its shares in a public offering, and distribute the remaining 90% of its holding to its own shareholders.

Mr Marchionne refused to speculate on Ferrari's value, saying only: "I think we will be pleasantly surprised."

The news of the spin-off was coupled with an announcement that Fiat Chrysler will issue 2.5 billion US dollars (£1.5 billion) in convertible bonds to help fund its business plan.

The board intends to complete the spin-off next year and said shares would be listed in the US, with a possible double listing in Europe, as Fiat Chrysler has done.

A Ferrari spin-off had long been speculated by industry experts as Mr Marchionne seeks to maximise values from the group's brands. Fiat Chrysler's other luxury brands, including Alfa Romeo and Maserati, will remain part of the parent company and are a key part of Mr Marchionne's plans to focus production in Italy on higher-margin luxury cars.

The decision to break off Ferrari comes about two months after an awkward management transition at Ferrari that saw long-time chairman Luca Cordero di Montezemolo resign after a public spat over strategy with Mr Marchionne, who has since taken over his job.

Mr Marchionne has been vocal in his displeasure over Ferrari's long absence from the Formula One winner's circle, and has pledged to get the team back to the top. The last time it won the driver's championship was in 2007.

"I think we need to continue to protect Mother Goose, which is the production of cars, and we need to get back on the track and start winning again, which is part of the DNA of the house," he said.

Ferrari has limited production to 7,000 vehicles a year to maintain its exclusivity, and Mr Marchionne said production would be increased only to match an expansion in the customer base.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.