The man who saved Fiat and Chrysler

It seems almost surreal and will take time for it to sink in that Sergio Marchionne is no longer around.

To think that it was less than two months ago when the charismatic CEO of Fiat Chrysler Automobiles (FCA) presented the five-year strategic plan at an event near Turin along with his leadership team. He seemed in good spirits and nobody would have thought at that point that a routine shoulder surgery would lead rapidly to his death.

People at FCA possibly expected the worst when the succession plan was announced last week even while Marchionne was apparently recuperating. It was very clear from the press release that he was in bad shape after the surgery following a series of complications. When news of his passing broke out on Wednesday, the reaction was one of profound sadness around the world.

After all, Marchionne was just 66 and even if he was due to step down in 2019, there was still so much he could have offered in subsequent years. There is no question that Mike Manley, who has taken over as CEO, is the best man for the job but will have a tough act to follow. After all, Marchionne was something else in terms of his sheer presence, clarity of thought and his ability to call a spade a spade.

Rescuing the company

The hugely charismatic CEO of FCA has left behind a stronger company that was virtually in ruins when he took charge way back in 2004. At that point in time, it was just Fiat, the solo entity, which was skating on thin ice and in danger of sinking deeper and deeper into a bottomless abyss.

It was Marchionne who brought it back from the brink and, during the years that followed, pulled off some astonishing moves like the acquisition of Chrysler during the great global meltdown of 2009. He was among the few big guns in the automobile industry, like Carlos Ghosn of Renault-Nissan, who commanded enormous respect for his strategy and vision.

How will India remember Marchionne? The country has had a decades-long association with Fiat, which began way back in the 1950s through a licensing agreement with the Mumbai-based Premier Automobiles. Yet, the Italian auto-maker continued to struggle and plod along even after it had decided to invest big time in the India of the 1990s, which had thrown open its gates to auto multinationals.

Crucial period

When Marchionne took charge 14 years ago, Fiat was in all kinds of trouble and financially paralysed. There were constant changes in leadership and there was big trouble ahead. Needless to add, this had its fallout in other operations, including India where things were virtually in inertia.

Marchionne had his work cut out and it would have been quite natural for sceptics to wonder how this man, with no experience in the automobile industry, was going to turn Fiat around. He surprised everyone by precisely doing that through a series of tough measures, which included negotiating a hefty parting package from erstwhile ally, General Motors.

It was now evident to other global chiefs in the automotive industry that Marchionne was somebody to reckon with. He was determined to put Fiat back on track, which was also good news for India. Two years into his tenure, the Italian car-maker signed a partnership agreement with Tata Motors, which would see the duo manufacturing and selling cars jointly from a new plant in Ranjangaon near Pune.

It was for the first time that the Indian media saw Marchionne in the flesh at the 2006 Delhi Auto Expo. By this time, he was already a celebrity of sorts thanks to the successful clean-up act at Fiat and was the cynosure of all eyes along with his equally charismatic counterpart from Tata Motors, Ratan Tata.

As Marchionne held forth with his rich baritone and clear articulation of the road ahead in this new partnership, he left a deep impression on those lapping up every word at the Auto Expo. He was back in India a couple of years later for an event in Delhi and this was the time when an unexpected, yet delightful encounter took place at the Italian Embassy in Chanakyapuri.

An encounter with the man

Some journalists had been invited for an evening event followed by dinner. Marchionne was present in his trademark sweater and trousers along with a host of other guests. As the night came to an end and people gradually began leaving the venue, I went up to the Fiat CEO and asked him gingerly if he was ready for an interview. To my surprise and delight, he immediately agreed and what followed was a memorable interaction.

Marchionne held forth on a series of topics during this chat ranging from Fiat’s relationship with Tata Motors to the challenges ahead for the company on a larger global level. What came through very clearly was his strength of conviction on a range of issues and a steely determination to get things in place. Here was a man who understood the issues dogging Fiat and the things that needed to be done to set them right.

By the end of the interview, I was literally on cloud nine. After all, it is not everyday that one gets a chance to meet some of the top world leaders who share their insights and experience. What was even more memorable in this case was Marchionne’s candour combined with easy wit during the interview.

He spoke of the changes happening worldwide in terms of fuel prices (which were then soaring at $100/barrel), economic cycles and so on, which required organisations like Fiat to display “tremendous dexterity”. This was particularly important, he added, as the automobile industry was “historically not known as being the fastest kid in the block. It always shows up four years later with the answer”.

In Marchionne’s view, Fiat had managed with “some intelligence and luck” to see a position for its car brands, which were absolutely consistent with consumer needs and demand. “The real push and obligation for an organisation such as ours is to be continuously ready to try and change its position in the marketplace,” he reiterated.

After all, the Italian market had had a severe downturn in the first eight months of 2008 and Fiat had been able to weather the storm by displaying strength in other markets. “We need to be continuously vigilant of our share and keep an eye on even the slightest shift in demand or in the moods and desires of customers,” cautioned Marchionne.

While driving home this message on that evening in Delhi, nobody really knew that this man was going to change things dramatically for his company the following year. Disaster first struck the world in the form of the Lehman crisis, which hit Detroit’s Big 3 — General Motors, Ford and Chrysler — with a vengeance.

The Chrysler bailout

This was the time Marchionne literally rose to the occasion and spearheaded the Fiat effort in bailing out Chrysler. The iconic American car brand had gone through a painful parting of ways with Daimler some years earlier and was now struggling to stay afloat.

It was not the easiest of times for sure but Marchionne pulled off the unthinkable with Fiat snapping up Chrysler. There was still a lot of work ahead in building synergies and identifying brands, which would now catapult the new company to greater heights.

Most importantly, Chrysler was rescued along with thousands of jobs and is now the lifeline for FCA. Today, thanks to Marchionne’s untiring efforts, the entity is a formidable force to reckon with. The Jeep brand accounts for a third of its sales and has also helped India surge ahead with the Compass, which is on a rock solid wicket.

FCA owes a lot to Marchionne who worked around the clock to put the house in order. Possibly, it was this stress that took a toll on his health but it was equally evident that he enjoyed his job immensely. It’s not too often that a powerhouse of talent like Marchionne comes along and this also puts in perspective why his unexpected passing will leave a huge void in the automobile industry.

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