Sergio Marchionne, former Fiat Chrysler CEO, has died
Sergio Marchionne, 1952-2018
Sergio Marchionne, the founding CEO of Fiat Chrysler Automobiles NV who died Wednesday at age 66, will be remembered as one of the auto industry's transformational figures.
An automotive outsider groomed as an accountant and financial officer, Marchionne engineered the merger of Fiat and Chrysler in 2009. By the time he was replaced as CEO by Jeep chief Mike Manley at a hastily called board meeting Saturday, Marchionne had revived the fortunes of both companies as a growing, international conglomerate encompassing 10 brands under the corporate umbrella of Fiat Chrysler Automobiles.
"His unbelievable turnaround left Fiat so much healthier than when he found it," said Jeremy Acevedo, manager of industry analysis for Edmunds. "He'll be remembered as one of the early 21st-century's great auto leaders along with Alan Mulally and Elon Musk."
Exor SpA, the holding company of Fiat's founding Agnelli family, confirmed Marchionne's death in a statement. It attributed his passing in Zurich, where he kept a home, to complications from surgery.
“Unfortunately what we feared has come to pass,” said John Elkann, a Fiat heir. “Sergio Marchionne, man and friend, is gone. I believe that the best way to honor his memory is to build on the legacy he left us, continuing to develop the human values of responsibility and openness of which he was the most ardent champion."
Industry leaders and politicians offered condolences. Bill Ford, executive chairman of Ford Motor Co., said Marchionne was an admired industry leader.
“Sergio Marchionne was one of the most respected leaders in the industry whose creativity and bold determination helped to restore Chrysler to financial health and grow Fiat Chrysler into a profitable global automaker," he said in a statement. "His extraordinary leadership, candor and passion for the industry will be missed by everyone who knew him."
Noted for a minimalist wardrobe that seemed limited to a closet full of black sweaters, Marchionne was as colorful as his sartorial taste was monochromatic.
"He was well-known for his business prowess as well as his disdain for suits and neckties," says Rebecca Lindland, senior auto analyst at Kelley Blue Book.
Never shy with a quip, the profane, funny, driven CEO bucked industry trends and questioned industry traditions. He famously said of the Fiat 500e, a poor-selling electric vehicle sold in California to meet the state's zero-emission mandates: “I hope you don’t buy it, because every time I sell one it costs me $14,000. I'm honest enough to tell you that.”
He was reticent to invest in electric vehicles at a time when competitors like General Motors Co. were rushing them to market. "Better late than sorry," he said in 2016. Yet, Fiat Chrysler was the first major automaker to announce a partnership with Google parent Alphabet Inc.'s Waymo subsidiary to put hybrid, self-driving minivans on the road.
Critical of the industry business model to build lookalike, compact four-cylinder sedans, he publicly courted other automakers — most notably GM — to merge and build common automobiles to save costs. No competitor took him up on the offer.
A quick study
Marchionne's family crossed the Atlantic from Italy to Toronto in 1965 when Sergio was 13 years old. After graduating from the University of Toronto with a degree in philosophy, the ambitious Italian-Canadian citizen added a bachelor of commerce degree and MBA from the University of Windsor, and a law degree from York University in Toronto.
He spent the 1990s working in financial positions with a series of international corporations, culminating in his first chief executive appointment at Swiss aluminum company Algroup in 1997. In 2002 he became CEO of Geneva's SGS, a Forbes Fortune 2000 company that works with companies to assure products meet regulatory standards.
Two years later, the Agnelli family, which holds a controlling interest in Fiat and its successor company, plucked him from Switzerland to become CEO despite Marchionne's lack of auto industry experience. He would prove a quick study and a shrewd judge of talent.
Ironically, given his obsession with a GM-Fiat Chrysler merger 10 years later, one of Marchionne's first acts at the Italian automaker was to quit a troubled partnership with GM in Europe. The divorce won Fiat $2 billion in needed cash from Detroit's No. 1 automaker.
But Marchionne's signature move was acquiring crippled Chrysler Group LLC out of bankruptcy in 2009 for no cash down and commitments to the U.S. government to meet a series of sales, engineering and technology goals in return for a controlling interest in the Auburn Hills company.
Key to that promise was bringing Fiat's know-how to develop a 40-mpg vehicle for Chrysler. Marchionne accomplished the feat with the fuel-efficient 2013 Dodge Dart. But Marchionne had his eyes on a bigger prize: unlocking the international potential of Chrysler's Jeep brand at a time when consumers were moving toward SUVs.
"He saw the pendulum swinging away from cars and towards SUVs," says Edmunds' Acevedo, who notes that Maserati and Alfa Romeo also expanded their SUV offerings under Sergio's watch. "He had the grit to make the hard decisions."
By 2014 Jeep's international sales crested 1 million for the first time under the leadership of Mike Manley, who Marchionne had brought in to run the off-road brand and who ultimately succeeded an ailing Sergio as CEO on July 21. By 2016, Jeep sales were 1.4 million globally, increasing four-fold in the U.S. alone over 2009.
Also upon assuming control of Chrysler, Marchionne spun off Ram from Dodge as a stand-alone truck brand, remade Dodge as a performance icon and re-introduced Alfa Romeo to the U.S. as a luxury automaker.
"He understood the legacy of a brand like Jeep, but at the same time he could bring back an old brand like Alfa," says KBB's Lindland. "He had the discipline of an accountant and the creativity of an entrepreneur."
Marchionne’s tenure was not, however, untouched by trouble.
Seven people have pleaded guilty in a widening corruption scandal involving Fiat Chrysler, the United Auto Workers and their joint-training center, funded by the automaker. Federal prosecutors describe a pattern of company officials funneling illegal payments to UAW leaders through training center accounts. The case already has ensnared former Fiat Chrysler executive Alphons Iacobelli and Monica-Morgan Holiefield, widow of former UAW Vice President General Holiefield.
Federal prosecutors say the automaker conspired with the UAW from before 2009 through 2015 to violate the Labor Management Relations Act. The law prohibits employers or those working for them from paying, lending or delivering money or other valuables to officers or employees of labor organizations — and from labor leaders from accepting such items. Prosecutors allege that Iacobelli and at least four other unnamed Fiat Chrysler officials were funneling more than $1.5 million worth of illegal payments to UAW officials.
Marchionne was questioned during a private meeting in July 2016 with the U.S. Attorney’s Office in Detroit, sources familiar with the investigation said. He was escorted to the meeting by his white-collar criminal-defense lawyer. Marchionne had not been charged with a crime during the ongoing federal grand jury investigation.
The automaker also faced allegations it cheated on pollution testing for diesel engines.
In May 2017, Fiat Chrysler said it would modify around 104,000 diesel vehicles after the Justice Department sued the the automaker, accusing it of illegally using software in diesel-powered Jeep Grand Cherokees and Ram 1500 pickups sold since 2014 to mask true pollution levels during testing. Court filings in May 2018 cited emails that diesel engine subsidiary VM Motori knew as early as 2010 that an auxiliary emissions control device would be illegal if concealed from regulators.
Bold vision, detailed
Marchionne's bold plans were laid out in public five-year plans beginning in 2010 with the CEO and his team telegraphing their product moves in the normally secretive auto industry. The ambitious plans sometimes fell short, yet Marchionne would reboot five years later with another five-year salvo.
"He was a very plain-spoken person," says Lindland. "He was a risk-taker but also able to motivate his team to take those risks with him."
Fiat Chrysler got an infusion of cash by spinning off Ferrari in 2015 in an initial public offering valued at over $12 billion. With its 9-percent stake in the prancing horse, Chrysler made off with nearly $1 billion. By the end of 2017, Fiat Chrysler's net profit had doubled over the previous year with the company predicting its profits would outrun Ford by the end of 2018.
In June, Marchionne presided over his final four-year-old plan rollout near Milan. He celebrated the impending elimination of the company's industrial debt by ditching his signature sweater for a tie. He also laid plans to turn over a company radically different from the one he had inherited 13 years earlier — its namesake Fiat and Chrysler brands a shadow of their former selves, and American and luxury SUVs carrying the sales load.
"He has left FCA in a good place," says analyst Lindland. "It will be interesting to see if Manley and his executive team can protect his legacy. Can they execute his five-year plan?"
She added: "They have large sweaters to fill."
Henry Payne is auto critic for The Detroit News. Find him at firstname.lastname@example.org or Twitter @HenryEPayne.