Sergio Marchionne a major loss to a motor industry in a state of spin
Boss of Fiat Chrysler saved both brands from bankruptcy
The sudden death of Sergio Marchionne is a major blow not only to the troubled Fiat Chrysler group but also the motor industry in general. Photograph: Reuters
The sudden death of Sergio Marchionne at 66 is a major blow not only to the troubled Fiat Chrysler group but to the motor industry in general. The Canadian-Italian chief executive had a track record in the motor trade that made him one of the industry greats. Not only did he save Fiat from bankruptcy, but he rescued Chrysler as well, creating one of the great brands.
And his talents didn’t just lie in making mega mergers work; he also instigated product plans that revived the fortunes of famous brands such as Alfa Romeo and Jeep. He led an impressive executive team who tapped into the public’s soft spot for historic models such as the Fiat 500, for example, to rebuild the Italian brand at a time when its very future was in doubt.
In person , Marchionne stood out from the rest of the motoring chief executives, not only by forgoing sharp suits for a v-neck pullover and slacks, but also for his candour. In an industry where hyperbole is everywhere, he was never afraid to lay out to the media the issues facing his brands and the industry as a whole. He was a frequent voice of warning about the threat posed by the wave of new technology washing over the motoring world, from electric powertrains to driverless cars.
At motor shows, it was the Marchionne Q&A sessions that served up the most interesting answers and debates. He could spin like the rest of them, but he could also be surprisingly frank and open.
Renowned for his 18-20-hour work days he was regarded as a very tough taskmaster, expecting the same from those around him. He was a chain smoker and espresso addict until about a year ago when he gave up both vices, though it appeared to have been a sacrifice too late.
The son of an Italian federal policeman (Carabinieri), Marchionne emigrated with his family to Canada when he was 14 and was fluent in English, Italian and French.
Perceived by many rivals as a bit of a maverick, he was able to detour from the traditional routes in business thanks to support from Fiat Chrysler’s largest shareholder, the Agnelli family. In return for that support, he made them a fortune, thanks to deals such as the spin-off of Ferrari, whose value rose more than tenfold during his tenure at the top of the motoring empire.
Marchionne rescued Fiat and Chrysler from bankruptcy after taking the wheel of the Italian carmaker in 2004 and he multiplied Fiat’s value 11 times through 14 years of canny dealmaking.
Against staunch resistance from traditionalists at the Italian car giant, he flattened an inflexible hierarchy, replacing layers of middle management with a meritocratic leadership style. He cut costs by reducing the number of vehicle architectures and creating joint ventures to pool development and plant costs.
Engineers, who had witnessed a steady stream of promising executives written-off over the years, privately voiced their respect for a chief executive for the first time.
In 2005, Marchionne forced GM to pay Fiat $2 billion (€1.7 billion) not to exercise an option to sell its auto division to the US carmaker. It was a major coup for Fiat and came just at the right time to save the brand.
Yet he did encounter roadblocks along the way and his was not a career without failures.
For all his dealmaking prowess, the cars he delivered to the market were rather a mixed bag. He recently revealed a five-year plan for the group, including a host of new models, but the markets offered a mixed response, having witnessed the failure to implement the previous five-year plan.
At the Fiat brand, for example, the dependence on small cars such as the 500 and Panda meant the brand struggled to make a profit while Marchionne didn’t push for new platforms to expand the product portfolio. And just as Fiat remains overly dependent on small cars, at Chrysler there is too much dependence on people carriers. Engineers and designers haven’t been able to push forward with new projects or expansions into new segments as quickly as rivals.
The business has also relied too heavily on the US for cashflow, from its Jeep and Ram divisions, while the potential of the Chinese market remained to be properly tapped. And in a world moving inexorably towards automation and electric powertrains, FCA’s mainstream brands didn’t seem to have a cohesive plan in place.
Recent attempts to lure another car giant to merge with Fiat Chrysler came to nothing, amid suggestions that the Agnellis would like to broaden their interests outside the motoring world.
Yet at a time of revolution in the industry, Marchionne’s leadership and wisdom was greatly needed among the established players trying to fend off newcomers such as Elon Musk’s Tesla, and potential incursions into the car world from tech giants.
The irony is that he was on the last lap in the role – due to step down next April – and work was underway to find a replacement when he went in for surgery on a shoulder, from which complications led to his death on Wednesday.
Fiat Chrysler has been left at a serious crossroads, and its share price, falling by 10 per cent on the day the firm also announced a 35 per cent fall in net profits, reflected the general concern about the long-term future plan.
The motor industry is meanwhile facing into the greatest upheaval in over a century without one of its key leaders.
Marchionne is survived by two children from his first marriage and his long-time partner.