Former Fiat-Chrysler Automobiles (FCA) chief executive officer Sergio Marchionne died on 25 July 2018 in a Swiss hospital, aged 66.
His health took an unexpected turn for the worse following shoulder surgery, according to a statement released by the company, and he never recovered. Once looked upon as an inexperienced outsider, he displayed monumental talent and superhuman grit as he dedicated 14 years of his life to turning around Fiat and Chrysler and merging them to create the world’s seventh-largest auto-maker.
We’re looking back at his life, career and the moments that made him one of the auto industry’s great leaders.
Marchionne’s early days
Sergio Marchionne was born on 17 June 1952 in Chieti, a town near Italy’s Adriatic coast (pictured). His father was a member of the Carabinieri paramilitary police force. At 14, Marchionne moved to Canada, where he had relatives, with his family in search of a better life. The New York Times reports his father decided to leave because he grew tired of Italian society’s obsession with superfluous attributes like status and preferred to live in a country that valued talent.
Marchionne earned a degree in philosophy from the University of Toronto (pictured). He then transferred to the University of Windsor, a school across the river from the city of Detroit, and completed a bachelor of commerce in 1979. He received a law degree from York University (Toronto) in 1983 and an MBA from the University of Windsor in 1985.
Marchionne’s career in the 1980s
With multiple degrees and a solid background in finance and law, Marchionne easily found a job as a tax specialist and accountant for the Canadian arm of the professional services giant Deloitte & Touche. He moved to a global packaging company named Lawson Mardon Group in 1985 and climbed from the position of group controller to become director of corporate development. He left the company in 1989 to join conglomerate Glenex Industries as its executive vice president.
While his career got off to a brilliant start, no one could predict he would later dedicate a sizable chunk of it to the automotive industry. Fiat didn’t need him yet. In 1983, the year Marchionne earned a law degree from York University, the top five best-selling passenger cars in Italy were made by Fiat or subsidiaries like Autobianchi. In 2003, when he joined Fiat’s board, Fiat had lost the number two, four and five spots to Citroen, Ford and Renault, respectively. Note: Fiat Uno pictured
Marchionne’s career in the 1990s
Though he spent 14 years at Fiat, an unusually long tenure for a CEO in the auto industry, Marchionne’s career suggests he formerly changed jobs whenever a better opportunity presented itself. He left Glenex Industries in 1990 and to become finance manager at an accounting firm Acklands. He returned to Lawson Mardon Group in 1992 and moved up the corporate ladder until he reached the rank of chief financial officer.
In 1997, at 45, Marchionne became CEO of Algroup, the Swiss industrial firm that purchased Lawson Group in 1994. Meanwhile, across the Alps, Fiat’s share of the Italian and European markets continued to erode. The Panda was a relic, the Punto was running out of breath and cars like the clever but controversial Multipla (pictured) did little to turn the situation around.
Marchionne’s career in the early 2000s
Algroup spun off Lonza Group, a company which specialises in chemicals, and Marchionne followed it to become its CEO and managing director in 2000 and its chairman in 2002. Swiss logistics services and testing company SGS recruited Marchionne as its CEO in 2002. He turned SGS around in just two years.
While he ran Fiat, Marchionne often tried seeking a merger partner and never ruled out selling all or part of the business if the right conditions were met; he even tried selling the group’s namesake car-building division early on in his tenure but didn’t find a buyer. His willingness to drastically restructure a company partly comes from the time he spent working in Switzerland.
Fiat hit rock bottom in the early 2000s. Many analysts predicted the automotive giant would crumble, a situation which would have sent the ever-fragile Italian economy spiralling into disaster. Fiat’s share of the European new car market fell from 9.4% in 2000 to 5.8% in 2004. The new, second-generation Panda (pictured) finally introduced in 2003 was its only glimmer of hope.
Marchionne joins Fiat’s board (2003)
Sergio Marchionne joined Fiat’s board of directors in 2003 as an independent director. Though he had zero experience in the automotive industry, he had earned an enviable reputation in the finance world as a hard-working, investor-friendly executive with an outstanding ability to turn around money-losing companies.
That’s exactly what Fiat needed. The brand teetered on the brink of collapse in 2003. Italian financier Roberto Colaninno told the press he wanted to make a rescue bid for Fiat and become its CEO but the board turned down his offer. Concurrently, rumours claimed the group would instead save itself by selling its car-building division and focusing on more profitable areas like tractors and insurance.
Fiat shares fell to an 18-year low in March 2003.
Marchionne takes the top job (2004)
Marchionne didn’t expect to become Fiat’s CEO so quickly. The chain of events that put him in the top spot a few weeks before his 52nd birthday started when 69-year old chairman Umberto Agnelli, an heir of the company’s founder, died of cancer. Board members appointed Ferrari boss Luca di Montezemolo to replace him. The decision angered CEO Giuseppe Morchio, who fully and openly expected to become chairman, and triggered his resignation. The board persuaded Marchionne to step in.
‘As part of my nature, I like to fix things and to be blunt, Fiat needs a fix right now,’ he said shortly after becoming CEO. His assessment was accurate. The second-generation Panda was a year old in 2004 but other volume models like the Seicento and the Punto (pictured) hadn’t changed significantly since the late 1990s. Fiat risked completely losing its edge in Europe’s small car segment.
The GM divorce (2004)
In 2000, General Motors purchased a 20% stake in Fiat for US$2.4 billion, though that figure dropped to 10% after it decided not to participate in the Italian company’s recapitalisation. The terms of the alliance included a clause which allowed Fiat to force GM into purchasing its car-making division between 2004 and 2009 if it decided to sell, a situation which seemed exceedingly unlikely at the turn of the millennium. No one could picture the Agnelli family giving up its crown jewel.
More concerned with profits than family ties, Marchionne publicly hinted on several occasions that he could ask GM to keep its promise or go to court. Top executives in Detroit had their own financial troubles to fix and Fiat’s situation was worsening every month. They argued Fiat had invalidated the put option through a capital increase and by selling off some of its assets.
In 2005, after months of negotiations and numerous threats of legal action, GM agreed to pay US$2 billion to avoid making the purchase. And, to no one’s surprise, it also dissolved its five-year old partnership with Fiat.
‘With US$2 billion you can make a lot of small cars,’ Marchionne later commented.
Marchionne takes over Fiat Auto (2005)
Marchionne fired Fiat Auto CEO Herbert Demel in 2005 and immediately took his position. He explained he wanted to speed up the car-building division’s recovery and noted it was the only part of the Fiat group that lost money in 2004. Many analysts doubted he could get the job done because he faced a Herculean task and had no experience in the automotive industry.
An ambitious five-year plan (2005)
Fiat outlined a five-year plan in August 2005. Speaking in front of the media, analysts, and investors, Marchionne announced the launch of 20 new cars between 2005 and 2008 and promised to invest US$11.8 billion to make its brands both competitive and profitable.
The model offensive promised in 2005 included an array of new products for Lancia, like a version of the Suzuki SX4 that never arrived, and the born-again 500 introduced across Europe in 2007. While Fiat said it would build the 500 in Poland, Marchionne also alleviated worker fears by promising not to close plants in Italy.
An investment in Chrysler (2009)
The short-lived alliance with Daimler left Chrysler in dire financial straits. The Detroit-based group faced extinction as the 2008 financial crisis decimated car sales, especially in its US home market. The Obama administration had its hands full saving General Motors and seriously contemplated letting Chrysler sink. Marchionne believed Chrysler could recover. He saw a golden opportunity to build a strong, global auto-maker present on both sides of the Atlantic – and beyond.
Fiat acquired a 20% stake in Chrysler from Cerebus Capital Management in April 2009, shortly after the American company filed for bankruptcy, with no cash and merely a promise to keep the brand afloat. On the one hand, the deal gave Chrysler a last-minute life-line and the technology it badly needed to make smaller cars; the 2019 Jeep Cherokee (pictured) still rides on a Fiat platform. On the other, the alliance gave Fiat the scale Marchionne wanted to remain profitable plus ready-made access to the North American market.
‘Independence in this business is no longer sustainable. You need at least 5.5 million to six million cars annually to have a chance to make money,’ he told industry trade journal Automotive News Europe in 2009.
FCA’s product offensive (2010s)
With the help of his executive team, Marchionne identified the stronger parts of FCA’s business that he could rely on to boost profits. He gave the 2007 Fiat 500 the green light for production, approved the development of several Jeep models (including the Renegade) and backed Dodge’s performance push by commissioning specialty models like the Hellcat.
However, Marchionne didn’t hesitate to make drastic cuts when necessary. He abruptly stopped production of the Chrysler 200 (pictured) and the Dodge Dart – two cars built on an evolution of the Alfa Romeo Giulietta’s platform – when sales began free-falling in 2016. By 2018, rival Ford had announced similar cost-cutting measures on the American market. Marchionne also effectively euthanized the Lancia brand and axed the Dodge Viper.
Forming FCA (2014)
Fiat moved fast to take over Chrysler. It raised its stake to 58.5% in 2012 and created Fiat-Chrysler Automobiles (FCA) when it purchased the rest of Chrysler from the United Auto Workers union in 2014. It announced plans to spin off Ferrari into an independent division and completed the process in 2016, though Marchionne continued running the brand until he stepped down in July 2018.
FCA’s stakeholders happily received 80% of the Ferrari shares issued when the brand went public. Ferrari floated 10% as part of its initial public offering (IPO) and Piero Ferrari, Enzo Ferrari’s son, kept 10%. Ferrari's stock price has since performed strongly, rising from US$34 in April 2016 to US$133 today, valuing the company at US$33 billion.
Outspoken and opinionated, Marchionne ruffled more than a few feathers during his tenure as FCA CEO. His transparency and tenacity set him far apart from other CEOs in the automotive industry.
He called the Jeep Commander (pictured) ‘unfit for human consumption’ in 2011. ‘We sold some but I don’t know why people bought them,’ he added to emphasise his point.
In 2014, he urged motorists not to buy the all-electric 500e because Fiat developed the car solely to comply with California’s emissions regulations and consequently lost $14,000 on every example it sold. He turned down several offers from Ferdinand Piech to buy Alfa Romeo and acutely pointed out Volkswagen should focus on fixing SEAT instead of extending its buying spree. He also initially refused to sell the Q2 and Q4 nameplates to Audi, though the companies later found a compromise.
Marchionne’s seemingly never-ending quest to find a company to merge with often made headlines. General Motors turned him down repeatedly, though he almost struck a deal with Opel in 2009. In 2017, rumours claimed China’s Great Wall was on the verge of purchasing Jeep; they turned out to be false. In 2018, a new round of rumours declared Hyundai was ready to buy FCA. Insiders suggested Marchionne released details about the talks with Great Wall to motivate Hyundai to make a move. The South Korean company later denied the reports.
Unique management style
Marchionne’s management style raised a few eyebrows, too. He worked seven days a week and commuted between Europe and North America on a nearly weekly basis. During national public holidays, he would fly to other countries in order to find people to carry on working with. Opponents called him a ruthless, thin-skinned leader who fired managers and executives with little or no prior notice. He occasionally admitted the long hours took a heavy toll on his health.
‘I can’t take it anymore. I’m extremely tired,’ he told the head of Italy’s Carabinieri after handing over the keys to a new Jeep Wrangler during a ceremony on 26 June 2018 (pictured). He noted during the ceremony that his father was an officer, and that the organisation had the "same values as the basis of my own education: seriousness, honesty, sense of duty, discipline and spirit of service." It was his last public appearance.
Partnership with Waymo (2018)
Marchionne played a key role in orchestrating a partnership with Alphabet’s Waymo division. In May 2018, the tech giant announced plans to purchase 62,000 additional Pacifica Hybrid minivans to convert them into prototypes for its growing fleet of self-driving cars. FCA also announced it had entered preliminary talks with Waymo to install self-driving technology in some of its regular-production vehicles.
Analysts and rivals often criticized FCA’s leadership for not investing enough money into the development of autonomous technology. The Waymo deal showed Marchionne wisely found another, less cost-intensive way to prepare for the potential advent of self-driving cars.
Marchionne’s last five-year plan (2018)
In June 2018, Marchionne presented FCA’s five-year plan in front of journalists and investors in Balocco, Italy. The presentation focused on new models for the Jeep, Maserati and Alfa Romeo brands. He announced an electrification offensive and revealed plans to explore new technology like an in-car purchasing service.
The executive also announced FCA had eliminated its nearly $13 billion industrial debt, a feat that left many analysts completely flabbergasted, and predicted a healthy boost in Jeep sales all around the globe will help the group triple its profits by 2022. ‘Emerging from the shadow of debt represents a fundamental change in how the company is perceived,’ he said during the press conference. In this picture he's with John Elkann, scion of the Agnelli family. Elkann's great-great-grandfather founded Fiat.
Marchionne’s resignation (2018)
Marchionne left his position as CEO on 21 July 2018. FCA explained his health took an unexpected turn for the worse after he suffered complications from shoulder surgery and announced he will not be able to return to work. The Briton Mike Manley (pictured above), who previously ran the Jeep and Ram divisions, replaced him. John Elkann replaced Marchionne as chairman of Ferrari while former Philip Morris boss Louis Camilleri took over as CEO.
Elkann and Marchionne became close friends over the years of working together. 'Unfortunately, what we feared has come to pass. Sergio Marchionne, man and friend, is gone,' Elkann wrote after confirming the former CEO's death.
In an untypical moment of unity, Italy’s political class saluted Marchionne’s 14-year run as Fiat’s chief executive. Former prime minister Silvio Berlusconi called him ‘the number one Italian manager’ and praised his intuition, courage, foresight and competence. Matteo Renzi, another former prime minister on the other side of the political spectrum, praised ‘a giant who changed Italy’s industrial history.'
Marchionne fully kept his promise of fixing Fiat and Chrysler. Speaking strictly from a business standpoint, his sudden resignation won’t shake FCA to its core because he planned to retire in April 2019 and had started preparing the company to continue without him. FCA confirmed Manley will implement the five-year plan Marchionne laid out in June 2018.
‘There is no script or instructions. Instructions are institutional and temporary. FCA is a culture of leaders and employees that were born out of adversity and who operate without sheet music,’ Marchionne explained during the presentation.
In Marchionne's final full year FCA earnings call in January 2018, Morgan Stanley analyst Adam Jonas stated: "We hadn’t seen anything like you. You took $2 billion roughly and you turned it into, I think, around $72 billion and more important than that there are many hundreds of thousands of families across many nations that are better off because of you and your team and you beat the skeptics every step of the way.
So, I just had to say God bless you, Sergio. We are never going to see anyone like you again."
Sergio Marchionne was divorced. He is survived by his partner, Manuela Battezzato, and two adult sons, Alessio and Tyler.
Marchionne was frequently interviewed by Autocar and we, like the rest of the car industry, will greatly miss him. Our deepest condolences to his family and friends.