Fiat Chrysler's top ranks in limbo after Marchionne's death
The death of legendary auto executive Sergio Marchionne left some gaping holes in the leadership at Fiat Chrysler Automobiles NV, but his chief executive job wasn't one of them.
Chrysler veteran Mike Manley ascended to CEO just four days before Marchionne succumbed to illness in a Zurich hospital. Amid the shuffle that followed, Manley retained his leadership role at Jeep and Ram — the transatlantic automaker's cash cows — and took over the embattled European operations.
Marchionne's death accelerated a succession plan that wasn't expected to be revealed until at least 2019. The star CEO's intended replacement was a top issue for many investors gathered at a June event in Italy, where Marchionne detailed FCA's road map for the future without him. But the CEO refused to elaborate on his plans, insisting it would distract from FCA's broader mission.
In the absence of a clear public statement from Marchionne, FCA's former head of Europe, Marchionne protégé Alfredo Altavilla, quit when he failed to succeed his mentor. That forced Manley, a Briton, to assume responsibility running what is arguably the automaker’s most troubled region — for now.
But on Manley's first earnings conference call — coincidentally occurring the same day Marchionne's death was confirmed by company officials — the new CEO said Altavilla's departure was "unfortunate" but "not unforseen."
"I don't see his departure at all impacting our strategy," Manley said on the conference call. "In fact, his replacement, which, by the way, will be announced in the near future, is going to be someone that's capable really of closing the gap to that new benchmark and setting a new FCA standard."
Despite the automaker's decidedly European roots, FCA still struggles to post consistent profits in the region. FCA's adjusted earnings slipped 6 percent in its Europe, Middle East and Africa region, and its European market share for passenger cars fell to 6.9 percent in the second quarter.
"Getting the right person for Europe is going to be critical," said Carla Bailo, CEO of the Ann Arbor-based Center for Automotive Research. "Manley is a leader who generally knows how to drive the success of a brand — as we've seen with Jeep — and he knows the European market. But even Sergio struggled with Europe."
Even after Manley hands over the European job, it's an area he likely will need to watch closely because the region accounts for more than 20 percent of the automaker's global revenue.
"When you're leading a company, you need to understand where the money is being driven and where the bleeding is, and you have to concentrate on stopping that bleeding," Bailo said. "For FCA, that would be Europe."
Beyond Europe, Manley faces challenges in an industry reckoning with the rise of self-driving technology and the electrification of global fleets in the face of increasingly stricter emissions regulations — particularly in China and the European Union.
Marchionne largely passed on both trends as he focused his efforts on balancing the books at FCA. He called EVs a money-losing proposition, and forged a partnership with Waymo that relied upon the Google spin-off to handle autonomous hardware and software development.
The limbo in leadership is an about-face for a company celebrating its industrial redemption just a few months ago. The sweater-wearing Marchionne briefly donned a tie at his five-year update to signal the end of FCA's net industrial debt accumulated amid Chapter 11 bankruptcy.
But it was Marchionne who used the closing remarks of his final five-year plan outside Milan earlier this summer to insist that FCA leaders are "born out of adversity and operate without sheet music."
In one of his last public appearances, Marchionne lauded the accomplishments of the last 14 years, claiming his mission was complete. The Italian executive reared in Canada had saved FCA's namesake brands from oblivion and ushered Chrysler through bankruptcy while growing the powerhouse Jeep and Ram brands.
Manley took over Jeep in 2009, chiefly masterminding the transformation from an American off-roading brand to a global brand and a leader in crossovers and SUVs. He took over Ram in 2015, most recently leading the launch of the truck brand's most advanced and fuel-efficient full-size truck to-date with the 2019 Ram 1500.
The success of these two brands earned them core spots in Marchionne's five-year plan, which revolved around what he called the automaker's four "global brands." It relies chiefly on the continued success of Jeep and Ram, and the growth of European luxury brands Maserati and Alfa Romeo in crucial global markets like China.
"Fundamentally, my mandate is to deliver that five-year plan," Manley said on the second-quarter earnings conference call. "We have all of the resources that we need over the period, and my intention is to deliver the plan as a strong independent FCA. And my team's focus is on that as well."
But one crucial task was left partially unfinished at the time of Marchionne's death: a succession plan. The late CEO had rebuffed all questions about his successor at the five-year business plan presentation at Fiat's historic proving grounds in Balocco, Italy.
Investors there continued to pepper FCA's 14-year leader with questions about his successor. He abruptly ended the investor Q&A and launched into his closing remarks with barely a transition. Ill for more than a year, Marchionne repeated his deflection: "It will be a 2019 event."
Still, a massive succession plan was already in the works at FCA, according to a company spokeswoman. Marchionne's sudden death just moved that plan into action quicker than expected.
"This whole situation raises an important question about how much information (a board of directors) should know about the health of their CEO," Bailo said. "Talking about succession needs to be normal."