Lack of planning leaves void at Fiat
• Car maker’s legendary former boss Marchionne dies in a Swiss hospital
Former Fiat Chrysler CE Sergio Marchionne, who died on Wednesday, assured investors for more than a year that he and the board were working on a succession plan ahead of his expected departure in 2019. But a health crisis that left Marchionne incapacitated set off a transition last week that was sudden and rushed, banking and industry sources said.
Former Fiat Chrysler CE Sergio Marchionne assured investors for more than a year that he and the car maker’s board were working on an orderly succession plan ahead of his expected departure in 2019.
But a health crisis that left 66-year-old Marchionne incapacitated in a Swiss hospital set off a transition last week that was sudden and rushed, banking and industry sources said.
The company announced on Wednesday that Marchionne had died, succumbing to complications from surgery.
It emerged that Marchionne’s successor was far from settled. Indeed before last week’s crisis, many company executives remained in the dark, four banking sources who spoke to Fiat Chrysler executives said.
The scramble to replace Marchionne led to the resignation of a senior executive who was passed over for the top job, the sources said, and exposed fissures between the Italian and North American sides of the world’s seventh-largest vehicle manufacturer.
Fiat Chrysler chairman John Elkann named Michael Manley, head of the company’s Jeep and Ram truck divisions, to replace Marchionne at an emergency meeting in Turin, Italy, on Saturday. In doing so, Elkann followed Marchionne’s wishes to appoint Manley his successor, two sources said.
The company has portrayed Manley’s appointment as the product of lengthy deliberation.
“Sergio and John have always been totally aligned on the choice of Mike Manley,” said Fiat Chrysler’s main spokesman, Mike Keegan, when asked whether there were differences over the succession. This description diverges from what Marchionne himself told investors on June 1 during a daylong strategy presentation in Balocco, Italy.
Marchionne said that he and Elkann “from time to time have these chats” about succession, but the issue would not be decided until next year.
He went on to say the company’s board would not engage in a “rubber stamp process”.
Some analysts have also expressed scepticism that a final decision had been made.
“My view is Marchionne and Elkann were still arguing about succession and had different views on the right candidate,” Sanford Bernstein analyst Max Warburton said in a note on Monday, referring to the June 1 presentation.
Sources close to the company said they believed two other candidates — Fiat Chrysler chief financial officer Richard Palmer and Europe chief Alfredo Altavilla — had been in the running to replace Marchionne and that Elkann was also exploring an “Italian solution” by naming an Italian-born CEO.
Altavilla quit after being told of Manley’s appointment on July 21, one of the sources said.
A company veteran who joined Fiat in 1990, Altavilla took charge of the group’s struggling European operations in 2012 and returned them to profit three years later.
Altavilla pressed Elkann to give him the top job on July 20 when it became clear that Marchionne would not come back to work, three sources said.
“For Altavilla it was too important — he wants to be CEO at least once in his career,” one of the sources said.
Marchionne underwent shoulder surgery in late June. The company said on July 21 that Manley would take over after Marchionne’s condition took a sudden turn for the worse. The company has not provided details on Marchionne’s illness.
Under the best of circumstances, Marchionne’s pending departure presented Fiat Chrysler with a major void to fill. Regarded as a saviour of Fiat, Italy’s automotive champion, the Italian-born Marchionne set in motion the marriage between Fiat and bankrupt US rival Chrysler just over a decade ago.
For the past several years Marchionne had tried to engineer a merger or alliance between Fiat Chrysler and another car maker, driven by the view that car companies are developing too much duplicate technology in the chase for cleaner engines and electric cars. That deal eluded him.
Jetting between the company’s offices and design studios in Europe and the US, Marchionne dominated Fiat Chrysler, eclipsing the executives under him.