In ailing health, Fiat Chrysler CEO leaves, causing automaker’s stock prices to fluctuate
Exit rushes plan for Jeep exec to take over, originally scheduled for early next year
MILAN— Fiat Chrysler shares were volatile Monday as investors expressed worry about the exit of ailing CEO Sergio Marchionne, whose driven and creative management style has been the company’s fortune.
Shares in the Italian-American carmaker closed down 1.5 per cent after a harder 4 per cent opening tumble in the first trading since Marchionne’s grave health condition was disclosed over the weekend.
Marchionne, 66, was born in Italy but raised in Toronto, and holds degrees from University of Toronto, University of Windsor and Osgoode Hall.
Trading was volatile, particularly after news that the head of the big European operations, who had been considered one of Marchionne’s potential succes- sors, was quitting. Ferrari, where Marchionne was also replaced at the helm, closed down about 5 per cent.
The Fiat Chrysler board on Saturday named long-time Jeep executive Mike Manley as CEO, unexpectedly accelerating a transition that was planned for early next year. The company said Marchionne suffered complications from shoulder surgery in Zurich last month that worsened in recent days, and that he could not resume his duties. No other details were released.
Marchionne will be a hard act to follow. Analysts credit his industry vision and ability to strike deals and take risks for increasing the market value of Fiat by tenfold since he took over in 2004. And while he was due to retire in 2019, most expected him to stay on in some role to guide the company.
“Some of us assumed he’d remain as chairman and be there to phone in his instructions,” said Max Warburton, an analyst at market research firm Bernstein who often publicly tussled with Marchionne on conference calls about earnings. “Marchionne ran FCA in a command and control style, with constant firefighting measures. There is no operating manual to follow.”
Marchionne engineered both the turnarounds of Italian carmaker Fiat and Chrysler, which Fiat acquired in 2009 in a deal with the U.S. government, creating the world’s seventh-largest carmaker out of two formerly dysfunctional entities.
He created shareholder value for the Fiat-founding Agnelli family with successful spinoffs of Fiat’s heavy vehicle maker CNH Industrial and of the iconic Ferrari super sports car company. But his goal of another big merger failed to find any takers.
Marchionne proved himself a consummate deal-maker. He won control of Chrysler in a 2009 deal with U.S. president Barack Obama’s government without putting a penny down, only in exchange for bringing more small-car technology to Chrysler.
In May of 2011, less than two years after leaving bankruptcy, Marchionne pulled off a huge refinancing of the company’s $7.5 billion (U.S.) loan from the U.S. government, retiring it with a combination of corpo- rate bonds, loans and payments, even though Chrysler had not yet turned an annual profit. Some of the debt carried at 12 per cent interest rate and cost the company $1.2 billion in interest per year. The manoeuvre helped the company to start making money again.
The Italian-Canadian manager later demonstrated his agility by refocusing U.S. production on trucks and SUVS and away from passenger cars to meet market demand, a process that got underway in 2016. And when Donald Trump took office, Marchionne quickly responded to his calls to keep jobs in America by repatriating production at a Mexican plant.
In Italy, Marchionne moved production away from lowmargin small cars and toward pricier Alfa Romeo and Maserati models for the export mar- ket, even if his relaunch of Alfa still has not reached his targets.
Marchionne had announced in his last major presentation to analysts last month that the quarterly results would show Fiat Chrysler at zero debt for the first time — an occasion for which the normally casually attired manager donned a tie — even if only briefly. The fiveyear plan included a significant shift to electrified motors.