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Michael Taylor23 Jul 2018
NEWS

Marchionne era ends at FCA

Fiat Chrysler CEO gravely ill after surgery complications; new boss named

Serious complications from surgery have forced long-standing CEO Sergio Marchionne to leave Fiat Chrysler Automobiles two years before his scheduled retirement.

Marchionne, the finance-driven industry giant who saved both Fiat and Chrysler from bankruptcy, will not return to his role as Ferrari CEO, either.

Marchionne, 66, has been replaced by Jeep and RAM head, Mike Manley. His role as CEO of Ferrari has been taken by Ferrari board member and ex-Philip Morris executive, Louis Camilleri.

FCA Chairman John Elkann set a deeply serious tone to Marchionne's departure, writing in a statement that the CEO had suffered serious complications from recent shoulder surgery.

The Italian media has been abuzz with rumours that Marchionne's surgery was for a serious illness rather than an injured shoulder, with suggestions of lung cancer.

Marchionne was a near-chain smoker until a year ago and 18 to 20-hour working days were not unusual for him.

His last public appearance was on June 26, when he presented the Carabinieri with a Jeep Wrangler. He appeared exhausted and unusually out of breath and he was in a Swiss hospital just days later.

FCA described his medical issue as a shoulder operation and the global car maker called an emergency board meeting after Marchionne's condition deteriorated significantly on Saturday. It gave no further details of Marchionne's prognosis, but Elkann's tone was bleak.

"This is without a doubt the most difficult letter I've ever had to write," Elkann, Chairman of the Agnelli family holding company Exor, said in a statement.

"It is with great sadness that I have to tell you that our CEO Sergio Marchionne, who recently underwent surgery, unfortunately experienced complications that have worsened in recent hours and will prevent his return to FCA.

"My first thoughts go to Sergio and his family."

"It is a situation that was unthinkable until a few hours ago, and one that leaves us all with a real sense of injustice," Elkann wrote.

"We met at one of the darkest moments for our company and it was his intellect, perseverance and leadership that saved Fiat.

"He also achieved a remarkable turnaround at Chrysler and, through his courage in forging the cultural integration of the two companies, he established the foundations for a more secure and brighter future for us to take forward. For what Sergio has been able to accomplish, turning the impossible into the possible, we will be forever grateful."

Other senior car industry figures have expressed their concern for Marchionne, including Aston Martin boss Andy Palmer.

Equally loved and loathed in FCA's Italian stronghold, he built a strong reputation as an imaginative wizard of finance and numbers. He has a less convincing record as a developer of desirable cars across the conglomerate's European brands like Fiat, Alfa Romeo, Maserati and Lancia.

The Italian-Canadian saved both Fiat and Chrysler from bankruptcy, starting with a cleverly worded "put" option that forced former shareholder General Motors to pay Fiat US$2 billion in 2005 for not taking over the entire company.

He pulled Chrysler out of bankruptcy at the depths of the global financial crisis, essentially stealing the American car maker for promises of Italian engine technology to pull their emissions and fuel consumption down. (Technology that was, ironically, co-developed with GM.)

He then took over Chrysler completely in a privately negotiated deal late in 2013.

He built the joint operation into the world's seventh-largest car maker, but leaves an operation overly reliant on just Jeep, RAM and Dodge for the lion's share of its cashflow and profit margin. FCA is also playing catch-up on architecture, internal-combustion and electric vehicle development.

He made and rejected a dizzying array of deals, spinning off the truck (Iveco), tractor (CNH) and sports car (Ferrari) arms of Fiat and leaving Fiat valued 11 times higher than it was when he took over.

Marchionne's FCA time

The son of a federal policeman (Carabinieri) in impoverished Abruzzo, Italy, Marchionne moved with his family to Canada when he was 14.
He has degrees in law, philosophy and business and speaks English, Italian and French fluently and began his career as an accountant in Canada. Marchionne joined the Fiat board in 2003 and took over as CEO a year later, with the company teetering on bankruptcy, and leaves it debt free, yet still troubled.
He recently revealed new FCA's five-year plan, complete with a full timeline for new models, yet its previous five-year plan remained shockingly unfulfilled.

FCA rode the SUV zeitgeist with Jeep and RAM (itself a spin-off from Dodge), to the point where several other manufacturers have tried to buy just the off-road brands from FCA, only to be rebuffed by Marchionne.

Prior to Jeep's rise, Marchionne also had to rebuff then Volkswagen Group Chairman, Ferdinand Piech, who repeatedly tried to buy the struggling Alfa Romeo brand.

"I have closed the door on Dr Piech, but he keeps trying to come in through the window," Marchionne joked.

The two car-making groups didn't see eye-to-eye, though, with Dr Piech publicly suggesting Fiat would need Government help to avoid bankruptcy in 2009. Then Volkswagen CEO, Dr Martin Winterkorn, also berated FCA for cheating on emissions in the wake of Dieselgate. Marchionne called Dr Winterkorn out, insisting that if he wanted to discuss the matter Winterkorn should meet Marchionne on his motor show stand at 7am.

Yet it was Piech's continued attempts at poaching Alfa Romeo that got under Marchionne's skin.

"Mr. Piech drop it, go and sing somewhere else," Marchionne once said. "I am not surprised by the German boasting."

To back up the words, at one point he even offered any Volkswagen Group customer an extra €1000 bonus to switch to one of his cars.

He was a grueling taskmaster who slashed costs, slashed platforms and delayed new engineering technologies as long as possible. Marchionne refused to allow FCA's engineers to develop a new B-segment hatch architecture on the grounds that it didn't make money, then forced them to build yet another new car (Tipo) off the old Bravo platform.

It was a scenario repeated time and again in Turin and Michigan, with the engineering developers rarely winning with new projects. The exception was the ambitious 2014 attempt to bring Alfa Romeo back from the brink of irrelevance with the all-new rear- and all-wheel drive architecture first seen in the Giulia.

Codenamed 'Giorgio', the modular architecture for the Giulia was also slated to sit beneath small, medium (Stelvio) and large Alfa SUVs, a larger Alfa limousine, an Alfa Coupe and a Convertible. All bar the Giulia and the Stelvio have been shelved.

The modular platform was also planned to have an impact at struggling Maserati, where it was to underpin a compact SUV – due for launch next year – positioned in the range below the Levante. Marchionne also planned for the platform to be the basis for a smaller Maserati sedan.

Chrysler has fared worse under Marchionne's sway, with its passenger-car push stalled and the brand surviving mainly via its people movers. But the worst of all is Lancia, which Marchionne unsuccessfully tried to revive in Europe with badge-engineered Chryslers. The once great, innovative brand now sells only the Bravo-based Ypsilon hatch, and only in Italy.

It has had very little success in the China, the world's biggest car market, with the country's EV quotas remaining a significant impediment to success.

FCA has also produced no plans for electrification, with Marchionne even trying to talk other car makers into pooling their EV resources for what he saw as less important technology, unlike engines, and more of a commodity. That, predictably, failed, and he had been forced to play catch-up and was in the early stages of negotiations with the Hyundai Motor Group to share technology.

His Successor

Born and raised in England, Mike Manley took over from Marchionne during an emergency board meeting on Saturday night.

He was already slated to take over from Marchionne when the CEO retired next year, transforming Jeep into a million-car brand with a wide product range and the huge profits that have kept FCA afloat.

With a degree in engineering and a Masters in business management, Manly, 54, has committed to implementing Marchionne's 2018-2022 business plan.

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Written byMichael Taylor
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