Auto industry savior Sergio Marchionne dead at 66
Capeless crusader Sergio Marchionne didn’t singlehandedly save Chrysler or Fiat from bankruptcy, but without his tireless feats of ingenuity, those two automakers would surely be gone today. Unfortunately, it’s Marchionne who perished on July 25th, following complications from cancer surgery on his shoulder at Zurich, Switzerland’s University Hospital.
Marchionne was born in Chieti, Abruzzo, Italy in 1952. At age 13, he and his family relocated to Toronto, Ontario, Canada. As a result of the move, Marchionne enjoyed dual Canadian and Italian citizenship and was fluent in English, French, and Italian. Following undergraduate studies, he earned Bachelor of Commerce and MBA degrees from the University of Windsor plus a 1983 law degree from Osgoode Hall Law School at York University.
Rocketing up corporate ranks in accounting and tax analysis positions, Marchionne became CEO of Switzerland’s Alusuisse Lonza Group Limited in 1997, then Chairman of Geneva’s SGS S.A. in 2006. He joined Fiat’s board of directors as an independent advisor in 2003. To fill the void created by the deaths of two Agnelli brothers, Marchionne became Fiat’s CEO in 2004.
Unfortunately, Fiat was losing billions per year. With state backing, Marchionne promptly slashed wages and trimmed middle management ranks. Some $2 billion came from cancelling the deal GM made with Fiat to buy 80 percent of the Italian company’s car business. After two years under Marchionne’s leadership, Fiat turned a profit.
That set the stage for the unlikely marriage of Chrysler and Fiat in the teeth of the 2008 financial crisis. After negotiating $8 billion in US and Canadian government loans, Fiat took control of Chrysler when it filed for bankruptcy. In lieu of liquidation, Marchionne closed unneeded dealerships, cleaned house in the executive suite, and instituted sweeping changes in the product lineup. The following year, Chrysler emerged from bankruptcy as part of the Fiat Group with Marchionne as CEO. The two companies completed their merger in 2014.
To execute his mission, Marchionne jetted between offices in Michigan, Turin, and Switzerland. He kept half a dozen smart phones within reach, worked 24/7, and expected his lieutenants to match his grueling schedule. His uniform was a black wool sweater over blue jeans and some 30 examples of each were kept at every location he considered home. Even when meeting dignitaries such as President Donald Trump, Marchionne never deviated from his strict dress code.
In contrast to other top auto executives, Marchionne maintained a refreshingly candid dialogue with the media. After a restyled Dodge Caliber failed to earn much market interest, he called it “an abomination.” When the Dodge Dart reengineered on an Alfa platform stumbled, Marchionne was the first to identify consumer flight from small cars to crossovers, SUVs, and pickups. It’s now clear that resources needed to sustain Dodge and Chrysler need to continue shifting to Jeep and Ram, the two thriving cash cows in Fiat Chrysler’s stable.
Marchionne’s 2015 “Confessions of a Capital Junkie” treatise painted the auto industry as a laggard in enterprise value and return on investment versus other businesses. To survive the next economic downturn, he preached that more mergers and acquisitions among the top car producers would be necessary. After overtures to first GM then Volkswagen failed to gain traction, Marchionne finally acknowledged that Fiat Chrysler was prepared—and able—to pursue its global aspirations without a partner.
As a result of the company’s stock price quadrupling over the past four years, Wall Street analysts have shifted from skeptics to Marchionne’s most ardent admirers. U.S. sales have doubled since 2008 and Fiat Chrysler’s 4.7-million global volume in 2017 makes it the world’s eighth-largest vehicle producer.
Marchionne’s management team recently mapped future strategies including his plan to retire in 2019. After his condition suddenly faltered on July 21, Fiat Chairman John Elkann announced that Marchionne was immediately stepping down and that veteran Jeep and Ram brand boss Michael Manley would assume Fiat Chrysler’s CEO duties.
Marchionne is survived by two grown sons and his longtime companion Manuela Battezzato. He will be missed by thousands of employees around the world whose jobs he saved and scores of journalists impressed by his ability to fix circumstances others deemed far beyond repair.