Marchionne Exits Fiat Chrysler, Ferrari Amid Health Crisis – Sources
Fiat Chrysler (FCA) boss Sergio Marchionne is to be replaced permanently at the helm of the global carmaker as well as Ferrari, after suffering serious complications from surgery, people with knowledge of the matter said on Saturday.
The boards of FCA, Ferrari and CNH Industrial, the truck and tractor maker Marchionne also chairs, were meeting on Saturday and might name his successors the same day, two sources said.
Spokespeople for FCA and Ferrari declined to comment.
Marchionne’s early departure is likely to renew investor focus on FCA’s consolidation options.
Marchionne, credited with rescuing Fiat and Chrysler from bankruptcy since taking the wheel at the Italian carmaker in 2004, had been due to step down from the combined group next April. His internal successor had yet to be named.
FCA said this month that Marchionne had undergone shoulder surgery and was in recovery. But the 66-year-old has since suffered “massive” and serious complications, the sources said.
The group’s Chief Financial Officer Richard Palmer, Europe chief Alfredo Altavilla and Jeep brand boss Mike Manley are seen as being among the top candidates to replace him.
Marchionne, who has been described as a workaholic by people working with him, suggested last year that his duties could be shared by several executives, saying: “My job is not easy.”
At luxury carmaker Ferrari, spun off by FCA in 2016, board member Louis Camilleri is now likely to step in as chief executive, one source said. Marchionne had previously said he planned to stay on as Ferrari Chairman and CEO until 2021.
Camilleri’s likely appointment was first reported by Automotive News, which also said FCA Chairman and Agnelli family scion John Elkann would be Ferrari’s new chairman. The Agnelli family still controls all three companies.
The boards of FCA, Ferrari and CNH are expected to issue separate statements after all three meetings have concluded.
On Friday, FCA denied a report by Italian website Lettera43 that Elkann had summoned top executives to a meeting on Saturday in order to reassign Marchionne’s responsibilities.
Marchionne’s exit will bring new attention to FCA deal prospects that he had explored. One of the auto industry’s longest-serving CEOs, Marchionne has been a firm advocate of tie-ups to share the growing cost burden of developing cleaner, electrified and autonomous vehicles.
But after being rejected by his preferred partner General Motors, Marchionne turned back to the task of cutting FCA’s debt – a goal he achieved last month – while maintaining that a merger for FCA was “ultimately inevitable”.
He has resisted the comparatively easy step of selling off coveted brands such as Jeep, saying that would leave too big a problem with “the stump that is left behind”.
Whoever takes over at FCA, will have a tough act to follow.
Marchionne resurrected one of Italy’s biggest corporate names and revitalised Chrysler, succeeding where the U.S. company’s two previous owners – Mercedes parent Daimler and private equity group Carberus – both failed.
He flattened an inflexible hierarchy, replacing layers of middle management with meritocracy. He took a knife to costs, drastically reducing the number of car platforms, and formed joint ventures to share development and manufacturing.
For 14 years he relentlessly pursued those goals, sleeping on the couch of his private plane while jetting between offices in Detroit, Turin and London, often in the same week.
A tough negotiator known for getting his way, in 2005 he persuaded GM to pay Fiat $2 billion not to exercise an option to sell its auto division to the U.S. carmaker – a history that may not have helped his later merger overtures.
Marchionne has multiplied Fiat’s value 11 times since taking charge, helped by moves such as the spinoffs of CNH Industrial and Ferrari. His planned separation of parts maker Magneti Marelli, due this year, should further increase that value-generation.
Although described by Bernstein analyst Max Warburton as “God’s personal gift to auto sector investors”, Marchionne has a more mixed record in delivering on operational turnaround plans.
Profitability in Europe is only gradually recovering, FCA has yet to make any significant inroads in China and Alfa Romeo has yet to turn a profit.
But investors took reassurance from what Marchionne achieved in North America, which now makes three-quarters of profits.
Marchionne ended production of unprofitable sedans in the United States and retooled plants to boost output of lucrative SUVs and trucks – a move since emulated by U.S. rivals Ford and GM. He has also committed FCA to catch-up in electrification as part of a new strategy unveiled in June.
But for fund managers like Umberto Borghesi who were betting on Marchionne pulling off another big deal before handing over the reins, the FCA investment case may just have changed.
“The day he leaves, this company will lose its appeal,” Borghesi, who is chief investment officer at Britain-based Albemarle Asset Management, said this year. (Additional reporting by Danilo Masoni in Milan and Elvira Pollina in Turin; Editing by Mark Bendeich and Andrew Bolton)
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