Fiat Chrysler’s European chief resigns after being passed over

New Fiat Chrysler boss to attempt to stay on course in post-Marchionne era

Sergio Marchionne, former chief executive officer of Fiat Chrysler. Photograph: Chris Ratcliffe/Bloomberg

Sergio Marchionne, former chief executive officer of Fiat Chrysler. Photograph: Chris Ratcliffe/Bloomberg

 

Fiat Chrysler Automobiles NV’s European chief has resigned after being passed over to replace ailing Sergio Marchionne as chief executive of the group, according to people familiar with the matter.

The departure of Alfredo Altavilla, chief operating officer for the region, deprives new Fiat Chrysler chief executive Mike Manley of crucial management experience as he tries to steady the ship following the sudden loss of Mr Marchionne, who was forced to relinquish his post of 14 years due to declining health.

Mr Altavilla (54) was a close aide to Mr Marchionne, having overseen Fiat Chrysler operations across the globe. He was considered one of the three leading candidates for the top job, along with Manley and chief financial officer Richard Palmer.

Mr Manley was selected on Saturday as the new chief executive, only days ahead of the company’s July 25th results presentation. Mr Altavilla’s resignation raises the stakes for Manley when he addresses investors Wednesday for the first time as chief executive.

He already faced pressure to show he was capable of moving the Italian-American automaker forward without Mr Marchionne.

Now he will be face questions on whether he can hold together an experienced management team or face more turmoil in executive ranks. A Fiat Chrysler spokesman wasn’t immediately available for comment.

Mr Manley was set to meet with Fiat Chrysler’s top managers in Turin, Italy, on Monday for a group executive council meeting, the people said.

The meeting marks the beginning of his tenure following a man credited with saving both Fiat and Chrysler, and increasing shareholder value tenfold during his 14-year tenure.

Mr Manley faces the task of executing his predecessor’s plan to ramp up production of SUVs and catch up on electric cars to keep the world’s seventh-largest carmaker competitive in the absence of a merger.

Mr Marchionne was already due to step down next April, but shares are likely to react to the news of his health crisis on Monday. The stock closed at €16.42 on Friday.

Fiat Chrysler Automobiles NV said British-born Mr Manley would pursue the strategy that Mr Marchionne outlined last month.

SUV pledge

Fiat Chrysler has pledged to increase production of sport utility vehicles and invest in electric and hybrid cars to double operating profit by 2022. It also unveiled bold targets for Jeep, which has become Fiat Chrysler’s ticket to creating a high-margin brand with global appeal.

Analysts said that choosing the 54-year-old Manley, under whose watch Jeep’s sales surged fourfold, sent a clear message that Fiat Chrysler was staying on course and would keep the Jeep brand at the heart of its growth plan.

“Manley knows that his primary focus is on execution and that, already, he has a strategy into which his team has bought,” said George Galliers, an analyst at Evercore ISI. “There is no reason the 2022 plan cannot be executed.”

Former Fiat Chrysler chief executive Sergio Marchionne and departing chief operating officer Alfredo Altavilla. Photograph: Tony Gentile/Reuters
Former Fiat Chrysler chief executive Sergio Marchionne and departing chief operating officer Alfredo Altavilla. Photograph: Tony Gentile/Reuters

Under Mr Manley, the company is expected to sharpen its focus on revamping individual brands, including ailing Fiat in Europe, Chrysler in the US and Alfa Romeo, which has yet to turn a profit despite multibillion-euro investments.

Mr Marchionne, widely credited with rescuing both Fiat and Chrysler from the brink of bankruptcy, had focused on fixing Fiat Chrysler’s finances first, notably erasing all debt.

He was a gift to investors, including Italy’s Agnelli family, through 14 years of canny dealmaking, growing Fiat’s value 11 times, helped by spin-offs of tractor maker CNH Industrial NV and Ferrari NV. The Agnellis still have a controlling interest in all three companies.

Mixed record

But his track record at fixing some of Fiat Chrysler’s brands was mixed, with investments and product launches repeatedly delayed.

Profitability in Europe is only gradually recovering, Fiat Chrysler has yet to make significant inroads in China, and the company relies on North America for three-quarters of its profits just as that market is expected to come off its peaks.

“Fiat Chrysler needs to fix the volume brands before it’s too late and make them appealing again ... Manley is the right man for that job,” said Felipe Munoz, an automotive analyst at JATO.

Mr Marchionne had advocated industry mergers to share the cost of building electric, hybrid and self-driving cars, but gave up the quest when his preferred target, General Motors, rejected his advances.

Fiat Chrysler said on Saturday that Mr Manley would execute the new strategy to ensure a “strong and independent” future for the group.

But without a partner in sight, he needs to show that Fiat Chrysler can keep churning out profits on its own, even as emissions rules tighten, SUV competition intensifies and worries over potential US emissions fines abound.

While Fiat Chrysler had a succession plan, the future appears less clear at Ferrari, the luxury brand Mr Marchionne was due to lead until 2021.

Ferrari announced some midterm targets earlier this year – pledging to double core earnings and churn out hybrids and an SUV – but a detailed strategy was due in September.

Mr Marchionne made some bold choices in recent years, notably raising production, but was always careful to not dilute the brand’s exclusivity.

Analysts questioned whether new chief executive Louis Camilleri would be able to do the same and grow Ferrari beyond what it is today while keeping dealers, racing fans, owners and collectors on board.

“[Ferarri] will always be like a fine race car. Marchionne increasingly had it tuned to perfection,” Mr Galliers said. “It has to be seen if it can remain so without him.” – Reuters