End Too Soon

The automotive universe reels as a giant leaves the stage.

Image credit: (c) toledoblade

It wasn’t supposed to end like this. The plan had been to anoint a successor in 2019, perhaps even bow out having secured the deal to end all deals. For almost a decade and a half, FCA’s Sergio Marchionne has been the master of the unexpected, but the sudden news regarding his deteriorating medical condition has brought a controversial reign to a premature, troubling and somewhat ambivalent end.

From his appointment as Fiat CEO in 2004, Marchionne appeared not to have bothered to read, never mind adopt the auto-business-CEO handbook. Arguably the first post-factual auto boss, Marchionne’s stock in trade has been to keep everyone guessing. But unlike the current incumbent of the White House, (whose somewhat unorthodox approach he shares) he really did seem to have mastered the art of the deal.

Be it the $2 billion extracted from General Motors to extricate Fiat Auto from its then-unwanted post-millennium alliance, the agreement with Ford to co-develop the Tychy-Ka / 500 on a common platform (believed to have been funded by the blue oval), to the audacious coup to take over the bankrupt Chrysler business in 2009 and its subsequent reconstitution as FCA, he seemed capable of pulling rabbits out of hats at will.

In his wake however, lay the collateral damage of the Marchionne shock doctrine, as model lines and entire marque identities were cast aside in the ‘at-all-costs’ push towards viability. One thing eluded him however, the mega-merger he repeatedly told anyone prepared to listen was required to secure the business.

Marchionne argued long and hard for increased consolidation within the motor industry, but as car companies battled an unprecedented array of seemingly intractable challenges, they seemed ill-prepared to listen, especially given FCA’s notoriously slapdash approach to doing business.

Yet despite his many critics, FCA’s current position (on paper at least) appears stronger than it ever has been. One could argue of course that Marchionne has been fortunate, the sales successes of Jeep and Ram coming on the back of a US-market recovery based on low oil prices, an SUV-boom and the ready availability of inexpensive credit. But for many observers, the jury on FCA as a medium-term business proposition remains very much out.

Recent reports seem to confirm that the sudden deterioration in Marchionne’s health brooks no return. FCA have acted decisively by appointing former Jeep CEO, Mike Manley as his successor, and are keen to present matters as business as usual. But it isn’t, and can’t be; yesterday’s resignation of high profile EMEA chief, Alfredo Altavilla in the wake of Manley’s ascension, suggests the sudden transition will not be without consequence.

That a sizeable vacuum would be left by the departure of someone of Marchionne’s stature was always inevitable, but when it’s as sudden and shocking as this, it’s an entirely new frontier. Manley has formidably big shoes to fill and an awful lot of vexing matters to deal with, so we can be certain that his appointment has been made with half an eye to the financial markets who will be watching developments with forensic attention.

Clearly it’s still far too early to accurately assess Marchionne’s legacy. What we can say is that his tenure bought FCA sufficient time to plot a survival course and a state of readiness for a strategic alliance which could secure its future. At what cost this has been achieved remains to be seen however.

But while Marchionne leaves the field having achieved more than his detractors could possibly have predicted, he has also left a tremendous amount of detritus where it fell. From the half baked reinvention of Maserati, the sluggish reboot of Alfa Romeo. From to the slow, painful asphyxiation of Lancia, to the growing irrelevance of brand-Fiat. Not to mention the effects of FCA’s slash and burn approach to brands-Chrysler and Dodge at the altar of Jeep and Ram.

Nevertheless, it’s very difficult to envisage an FCA without him at its helm. And while his ultimate departure was heralded, not even Mr. Marchionne’s most ardent critic (of which this author was one) would want to see him go out like this. We express our sincere condolences to his family and loved ones.

Sergio Marchionne: R.I.P.

[Author’s note: the text has been modified to reflect the sombre news of Mr. Marchionne’s passing. (July 25 2018)]

Author: Eóin Doyle

Founding Editor. Content Provider.

13 thoughts on “End Too Soon”

    1. I didn’t agree with his strategy at FCA but Marchionne seems to have been a decent person. I heard he would often talk to people at all levels with respect.

  1. I have been genuinely saddened by this news since the FCA management changes were reported on Saturday evening. I’ve never spoken to Sergio Marchionne, but I have seen him at close quarters and he has an extraordinary presence. Not the imperiousness of a Prince or Generalissimo of the industry, but the good-humoured assuredness of somebody whose every word is keenly awaited, and who does not disappoint.

    The first thought was of a boardroom coup, but Sergio’s Agnelli-Elkann masters and his management team appeared not only to trust him unshakeably – they utterly depended on him.

    At the weekend progressed, reports of the now ex-CEO’s condition became ever grimmer. There are no official bulletins, but the Italian media talk of inoperable lung cancer. According to reports he gave up the chain-smoked Muratti Privats and constant intake of expresso a year ago. His statements and actions over the last couple of years suggest a man who knew his time would soon be up. He dressed up the urgency as a self-set retirement date, but perhaps his body was warning him that his days were finite.

    The appreciations have already appeared in considerable number. Eóin’s is one of the best. I would also commend these:

    http://www.autonews.com/article/20180721/BLOG06/180729910/sergio-marchionne-fiat-chrysler-automobiles-ceo-rick-johnson

    https://www.bloomberg.com/news/articles/2018-07-22/marchionne-and-me-a-reporter-recalls-his-decade-with-fiat-s-boss

    It does indeed feel as if an extraordinary era has ended too soon. I’m reminded of some of the least controversial words of the divisive British politician Enoch Powell. “All political lives, unless they are cut off in midstream at a happy juncture, end in failure, because that is the nature of politics and of human affairs.”

    Much the same is true in the world of trade and industry, and this is by no means a “happy juncture”. Sergio’s achievements have been astonishing, but there is still business unfinished.

    Which brings one final thought. The announcement of the new leadership as word came of the CEO’s failing health seemed peremptory and hurried. Perhaps it is the way things are done in Italy and the USA. In Britain responsibilities would be divided, acting positions would be created without finality out of respect for the ailing leader.

    Perhaps it is a demonstration of strength, that Exor and FCA are substantial entities even without Sergio Marchionne. However, could it be that the real reason for the haste is that something big is about to happen – the completion of Marchionne’s ambition – which could not be finalised under a caretaker administration?

  2. Yesterday, Monday 23rd, Wikipedia had his death as July 25th. Two days in advance, which was spooky, because it implied that someone knew when the plug was going to be pulled on his coma due to embolism. Today that version was missing and his death date retracted. All most strange.

    Best writeup of this enigmatic man I found here:
    http://www.autoextremist.com

    1. Wasn’t it a bit loud? It had some information I wasn’t aware of. The Italy versus America/Fiat versus Chrysler culture clash could be written from the opposite perspective just as easily. Kettle, pot: hello.
      Marchionne’s biggest flaw was that he didn’t pay attention to brands or product detail. It was all muesli on wheels. And he killed Lancia.

    2. I argued with DeLorenzo about Marchionne for several years around 2011 to 2013. Then it started to go the way DeLorenzo said it would, so I was wrong. He’s been a critic of Marchionne for years, so this obit is no one-off. And yes, the messenger is as self-opinionated as his subject while being no fool. Investors saw a 10 fold increase in share price. So swings and roundabouts.

      Frankly, the European side of Fiat was and is a sideshow compared to the big bucks of Jeep and Ram. Without that, Fiat would have been a goner half a dozen years ago. It had no investment money whatsoever. Marchionne faithfully kept Fiat going trying to sell 500L and Renegades made in Yugoslavia and Italy worldwide. He spent billions on Maserati and Alfa Romeo that there is little hope of recovering – all siphoned off from profits in North America. Yet here you are complaining that he let Lancia die! I fear that in this case reality is not something you recognize. You anthropomorphise a brand without a separate engineering/production facility into some living entity without much justification, in my opinion. All past glory, and long past at that. Still, we all have daydreams.

      DeLorenzo bought himself an Alfa Stelvio earlier this year, to see if it was in fact as unreliable as initial reports had said. His reports so far are all very positive and are not begrudging.

      Manley won’t prop up Fiat would be my prediction. He has to fix FCA in China at once or face irrelevance there in a market too big to ignore. Ford and PSA are in the exact same pickle with sales off 50% in just a couple of years. But they don’t have Jeep, so good luck to them.

      Interesting to see that Wikipedia has restored its 23 July page upon Marchionne’s most unfortunate demise. A unique character gone too soon and completely unfazed by his naysayers – that was his strength as a leader. That and a sense of when to back off.

      With all the political claptrap ahoof these days, this Canadian’s death got about twenty seconds on Canadian national TV news here today. He deserved lot more than that. All we got was more Orange Mango buffoonery, a tear-downer rather than a builder-upper.

    3. Bill,

      thank you for your views, as always.

      However, from an Olde Worlde perspective, there is more than one fly to be found in the ointment that is the recent onslaught of Marchionne eulogies, some of which don’t fall into the ‘daydream’ category.

      Fiat: The car that kept the brand going, the 500, was signed off before Marchionne’s arrival – which is quite telling. For his product planning was sometimes half-baked and outright erratic on other occasions. He allowed the Punto (once among the bestselling cars of Europe) to die a slow death indeed. Those customers have since gone elsewhere for their supply of cheap & cheerful superminis.
      The 500L/XL/X on the other hand turned out to be most effective tools for gathering dust in dealerships’ showrooms. The last Bravo was a hastily developed (by Magna) effort that stood no chance of being competitive in the first place.

      Alfa: The different attempts and diversions that formed the prolonged relaunch of Alfa were bordering on the absurd. The 4C ‘halo car’ was as much of a joke as it was a waste of time and resources that did nothing to distract from the sobering fact that it shared floorspace at the showrooms with the likes of the Giulietta and MiTo. Allowing a brand to wither like this while at the same time stating the intention of relaunching it is hardly prudent.

      Lancia: The re-badged Chryslers were a debacle. Completely disregarding the fact that they destroyed whatever leverage the Lancia brand may still have had by that point, it was an utterly futile exercise whose failure was to be fully expected. A straightforward withdrawal of the Chrysler brand would have been the ‘tough ‘n straight’ solution that supposedly was Marchionne’s forte. The re-branding was simply daft.

      Maserati: Instead of going for Bentley (which would’ve been possible), Marchionne decided to aim the brand at the far more competitive ‘premium’ market. Without the budget to get certain basics right, the Ghibli/Quattroporte/Levante had to rely on the capabilities of the involved Ferrari engineers. But ‘characterful’ powertrains and handling setups are not what makes the difference in this sector of the market. A more style-conscious, driving pleasure-orientated alternative to Bentley’s offerings would’ve been a more attainable goal – and an appealing one too, given the profit margins in this end of the market.

      What we also shouldn’t forget is quite how many highly capable executives Marchionne alienated over the years. Herbert Demel was first, to be followed by the likes of Karlheinz Kalbfell and Luca de Meo (‘the last one at Fiat who understood cars’, according to a prominent, independent member of the Italian automotive sector). His power struggle with Luca di Montezemolo also was hardly to the benefit of anyone involved, apart from Marchionne himself.

      The Levante/Quattroporte VI/Ghibli Maseratis, the rebadged Chryslers, the 500 L/XL/X, the Alfa 4C, the Fiat Punto Evo facelift and the Bravo II were all, to varying degrees, poorly conceived cars that failed in the marketplace. And they were all, to varying degrees, loss-makers.

      It’s regrettable that this patchy (to say the least) track record is already being swept under the carpet. Or the fact that, according to numerous sources in Turin, Fiat has not a single new car in development right, with some claiming that BMW does more business with Italian engineering outfits these days than all of FCA.

      To put all of this into perspective, one could do worse than have a look at PSA, where Carlos Tavares was presented with a task that wasn’t completely dissimilar to Marchionne’s. Of course, some of the decisions made there can and should be questioned, but at the same time there is no doubting that the Peugeot brand in particular has been successfully restructured not just through the slashing of costs, but also by significantly improving the product. It’s the latter part of the equation that too obviously wasn’t among Marchionne’s main concerns.

    1. Mister FCA would be more appropriate.

      Marchionne’s talent was Machiavellian deals, at which he truly excelled. Without his unparalleled fiscal and negotiating nous, there was only a very slim chance of what was Fiat Group surviving.

      However, at the same time he showed utter ignorance and even cynicism when it came to the product side of things. His recent claims that Fiat as a mass-market produced is no viable business anymore have more than a whiff of a prophecy having fulfilled itself to them. After all, it had been Marchionne who’d halted all R&D work in the wake of the financial crisis. It was Marchionne who allowed as well-established a model line such as the Punto to simply wither and die. It was Marchionne whose numerous delays and changes in direction in relaunching Alfa resulted in the brand losing repeat customers and exposure.

      At the same time, he was also responsible for the pointless 4C, which was initially launched with the most awful headlight design to be found on any OEM’s product. In typical fashion, he rebuffed any criticism by claiming that changing that design would’ve been too expensive. When the 4C’s open-topped variant was launched a few years later, it came with a new, far better resolved solution. Which probably didn’t come for free either.

      So yes, keeping Fiat alive was a monumental achievement. But the price has been very high indeed and can still be felt in Turin and all of Italy, where the carrozzieri are among the most notable, but hardly the sole victims of his policy.

      As with most geniuses, Marchionne was as brilliant as he was erratic.

      May he rest in piece.

    2. Indeed. If you are interested in cars and brands Marchionne’s leadership is unfuriating. Could Marchionne have kept the whole operation running if he’d worked within the framework of Fiat, Alfa, Lancia etc as full-line marques? And Chrysler and Dodge have been virtually snuffed out.
      So, a clever money juggler and
      not a car guy. He’d have been a fascinating dinner guest.

  3. Gosh, just read the news of his death, which still comes as a shock, and must be devastating for his family and friends. RIP indeed.

  4. A great loss for the industry. It would have been nice if he became a next Bob Lutz, another industry guy with outspoken opions.

    As fir his controversial decisions. Everything was dictated by money and getting rid of the debt. You only have to look at the continued struggles of Opel/ Vauxhall and Ford Europe to understand many of his decisions. Competing is difficult in the VW era.

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