In a stunning development that is currently unfolding as we speak, longtime CEO of Ferrari and Fiat Chrysler Automobiles Sergio Marchionne, is stepping down from his post due to ongoing medical issues.
The 66 year old CEO recently had shoulder surgery three weeks ago, but “massive complications” following the surgery forced FCA’s board to make their move, though the company has not disclosed the extent of the medical complications, as well as Marchionne’s current condition.
FCA did however issue a brief statement regarding today’s events stating “While Mr. Marchionne was recovering from surgery,” his health has “worsened significantly in recent hours.” The company also revealed that as a result of this, Marchionne will not be formally returning to work. The board did move swiftly on finding a successor, and named current Jeep brand chief Mike Manley, as his replacement. Manley has been at the helm of Jeep for several years, and has helped Jeep become a crucial cog in FCA’s long term sales machine during his time in charge, with the brand being worth more than the rest of FCA itself.
This sudden shift in FCA’s top position comes only a few days before the company is due to publish its second quarter earnings report, which will undoubtedly raise questions from analysts and reporters despite the minimal impact Manley’s appointment will have on the earnings report.
Marchionne’s departure will also bring an end to one of the most successful eras ever ushered in by an automotive CEO. It began nearly a decade ago, when Marchionne (then the CEO of Fiat) orchestrated Fiat’s purchase of Chrysler from a bankruptcy that was under the watchful eye of the U.S Government. Several members of the Obama administration were lobbying for Chrysler to collapse and go out of business entirely, but Marchionne convinced Obama to let him buy the beleaguered car company, and save thousands of jobs in the process.
After the purchase, Marchionne immediately launched an aggressive campaign to breathe new life into the once mighty American car giant. Budget basement interiors, lousy engines, and a complete disregard for global markets were pitched in lieu of a newfound focus on the Ram and Jeep brands, with reduced investment into Chrysler and Dodge brands due to their mainly car focused lineups.
This focus on trucks and SUVs coincided with a shift in market demand here in the U.S. and allowed FCA to double its market share when compared to 2009. This upswing was mainly due to venerable nameplates like the Ram 1500, Jeep Wrangler, and the Jeep Grand Cherokee. Marchionne was also a key figure involved in Ferrari’s successful IPO, which surpassed expectations, and enhanced the brand’s reputation at the same time.
However, amid all of these successes there were a few notable missteps during his tenure. For example, the revamped Chrysler 200 and Dodge Dart aimed to reinvigorate Chrysler’s small car aspirations and in theory they had the goods to make up for all the sins generated by the doomed Dodge Avenger and Chrysler Sebring. When they arrived in dealerships, demand for small cars collapsed shortly after, and both models were eventually axed as part of FCA's focus on expanding SUV and pickup production.
A more notable example is the ongoing revival of Alfa Romeo. Marchionne burned a tremendous amount of cash trying to jump start the brand’s U.S. operations, but sales have lagged behind expectations including those outlined by Marchionne in a prior five year plan. This is in despite of a trio of compelling models such as the 4C, Stelvio, and the Giulia sedan.
As for Manley, a key question will be whether he will continue the merger path laid down by Marchionne? Or if he will shelve it in lieu of a more traditional long term plan. Manley does have a reputation for being a very analytical thinker, and perhaps that can help steer FCA through a very uncertain future, especially its quest to catch up to rivals in both electrification, and autonomous vehicle technology.