'Rushed' transition at Fiat Chrysler before chief's death

Mr Sergio Marchionne at the 77th Geneva International Motor Show in 2007. Fiat Chrysler announced yesterday that the 66-year-old had died, succumbing to complications from surgery. The company has not provided details on Mr Marchionne's illness.
Mr Sergio Marchionne at the 77th Geneva International Motor Show in 2007. Fiat Chrysler announced yesterday that the 66-year-old had died, succumbing to complications from surgery. The company has not provided details on Mr Marchionne's illness.PHOTO: EPA-EFE

LONDON/DETROIT • For more than a year, then Fiat Chrysler chief executive Sergio Marchionne assured investors that he and the automaker's board were working on an orderly succession plan ahead of his expected departure in 2019.

But a health crisis that left the 66-year-old incapacitated in a Swiss hospital set off a transition last week that was "sudden and rushed", sources said. The company announced yesterday that Mr Marchionne had died, succumbing to complications from surgery.

It emerged that his successor was far from settled. The scramble to replace Mr Marchionne led to the resignation of a senior executive who was passed over for the top job, sources said, and exposed fissures between the Italian and North American sides of the world's seventh-largest automaker.

Fiat Chrysler chairman John Elkann named Mr Michael Manley, head of the company's Jeep and Ram truck divisions, to replace Mr Marchionne at an emergency meeting in Turin, Italy, on Saturday.

In doing so, Mr Elkann followed Mr Marchionne's wishes to appoint Mr Manley his successor, two sources said.

The company has portrayed Mr Manley's appointment as the product of lengthy deliberation.

Some analysts have expressed scepticism that a final decision had been made.

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 Mr Marchionne and that Mr Elkann was also exploring an "Italian solution" by naming an Italian-born CEO.

Mr Marchionne underwent shoulder surgery in late June. The firm said on Saturday that Mr Manley would take over after Mr Marchionne's condition took a sudden turn for the worse. The company has not provided details on Mr Marchionne's illness.

Regarded as a saviour of Fiat, 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, he had tried to engineer a merger or alliance between Fiat Chrysler and another automaker, driven by the view that car companies were developing too much duplicate technology in the chase for cleaner engines and electric cars. That ultimate deal eluded him.

Jetting between the company's offices and design studios in Europe and the United States, Mr Marchionne dominated Fiat Chrysler, eclipsing the executives under him. He was a powerful advocate for the automaker's Italian cars and brands, and said he would not carry out restructuring to leave a "stump" company in Italy that could not survive.

Mr Manley runs the two brands, Jeep and Ram, that generate most of the group's profit. Born in Britain and based in suburban Detroit, he is expected by bankers and analysts at least initially to follow a five-year plan laid out by Mr Marchionne and other executives in June.

As Fiat Chrysler heads into what most industry executives and analysts predict will be a difficult 2019, the automaker's Italian brands have lost a powerful champion with Mr Marchionne's departure.

REUTERS

A version of this article appeared in the print edition of The Straits Times on July 26, 2018, with the headline ''Rushed' transition at Fiat Chrysler before chief's death'. Print Edition | Subscribe