Sergio Marchionne, the Italian-Canadian executive who spearheaded the revival of two historic car companies that merged to form Fiat Chrysler, has stepped down suddenly from the helm of the automaker amid serious health concerns.
He will be replaced by Michael Manley, who heads the company’s Jeep and Ram brands.
In a series of grim-sounding news releases on the weekend, Fiat Chrysler Automobiles NV and the chairman of its largest shareholder announced the end of the Marchionne era.
“I am profoundly saddened to learn of Sergio’s state of health,” said John Elkann, chairman of Exor NV, which holds a voting stake of 42 per cent in the car company and is the holding company for Fiat’s founding Agnelli family.
“It is a situation that was unthinkable until a few hours ago and one that leaves us with a real sense of injustice,” Mr. Elkann said in a statement Saturday.
A Fiat Chrysler statement, which expressed “profound sorrow,” said that unexpected complications arose last week from surgery Mr. Marchionne underwent in June. A heavy smoker until recent years, the 66-year-old underwent shoulder surgery.
The complications worsened significantly on Saturday, the statement said.
Succession planning was already well under way with Mr. Marchionne scheduled to depart less than a year from now. He, Mr. Manley and other senior executives laid out a five-year business plan on June 1 that includes continued growth of the Jeep brand, more products for the company’s luxury brands and an increase in hybrid and electric vehicles in the company’s portfolio.
Mr. Marchionne said at the time that Fiat Chrysler was in good shape to move on and thrive without him.
He looked haggard and exhausted at the event attended by investors, analysts and reporters.
Mr. Marchionne became one of the prominent industrialists of the 21st century first by restoring a decrepit Fiat to financial health in the early 2000s. Fiat became strong enough to be the only contender for Chrysler when the Detroit-based automaker went on the rocks during the 2008 financial crisis.
Fiat took majority control of Chrysler with the financial backing of the U.S., Canadian and Ontario governments. Without his intervention, Chrysler would have been liquidated and there were times during those 2009 negotiations when the deal almost fell apart.
But the merged automaker has been profitable for several years and is now debt-free.
Mr. Marchionne felt emboldened enough by his success to propose an even bigger combination – General Motors Co. was his preferred partner – but other car companies rejected his argument that consolidation was necessary to end decades of what he considered wasted capital spending that did not return value to shareholders of auto-making behemoths.
The future of Fiat Chrysler is not in doubt, but it lags behind some of its competitors in developing electric and autonomous vehicles. Electric vehicles represent the medium-term future of the industry while autonomous vehicles will take a decade or more to enter the mainstream.
Fiat Chrysler may yet merge with another automaker, but that is only likely to happen if Fiat’s founding Agnelli family retains a significant role in a larger entity, said veteran industry analyst Joe Phillippi, head of AutoTrends Consulting.
He noted that Jeep and Ram are the prizes for any company wishing to merge with Fiat Chrysler but “there’s a lot of chaff mixed in with wheat with respect” to the rest of the Fiat Chrysler brands.
Mr. Marchionne was born in Italy and migrated to Canada with his family when he was in his teens. He went to high school in Toronto and earned commerce and business administration degrees from the University of Windsor.
His commitment to Canada was clear, said Jerry Dias, president of Unifor, the union that represents workers at the company’s two vehicle assembly plants in Canada – a minivan factory in Windsor, Ont., and a large-car assembly plant in Brampton, Ont. – as well as an engine-parts operation in the Toronto suburb of Etobicoke.
Mr. Dias noted that Mr. Marchionne was the only chief executive officer of any of the Detroit Three companies to engage in face-to-face bargaining with the Canadian union during its contract talks with them.
"The fact that he showed up was his way of sending us the message that he was serious about the Canadian operations," Mr. Dias said. "He was serious about finding a solution."
In fact, Mr. Dias recalled, when they got into a heated debate about the future of the Brampton plant and the company's commitment to it, Mr. Marchionne pulled his Canadian passport out of his pocket and threw it on the table.
As Mr. Dias tells it, the CEO said: “ ‘What do you think? I’m going to screw the Canadian operations? I’m not going to screw the Canadian operations.’ ”
Mr. Dias then got up and said he would stand up at a Brampton ratification meeting and “ ‘I’m going to say, here’s what I’ve got for you. I’ve got [nothing] for you but I’ve got Sergio’s word not to worry about it.’ ”
He said Mr. Marchionne started laughing and agreed to put on paper a $300-million commitment to a new paint shop at the plant.
Mr. Dias said he’s not worried about the future of the company under new CEO Mr. Manley; he’s more concerned about Donald Trump’s threat to impose tariffs of 25 per cent on Canadian-made vehicles imported to the United States.
That would affect the Chrysler Pacifica and more than 6,000 jobs in Windsor and the Dodge Charger and Challenger, and Chrysler 300 sedans in Brampton, where the company employs about 2,500 people.
With a report from Eric Reguly