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Thursday, July 26, 2018

Sergio Marchionne who turned Fiat's fortunes is no more

It was my school days (may be 1978 !)  ~ I was standing in front of my house – a Premier Padmini car passed by (those were the days when automobiles were scarce and only rich and influential people owned them) – (was that regn no. 5004 ??) – its driver was seated upright, pronounced mush, he parked the car infront of my house, got down and went inside Sri Raghavendra Temple -  it was ‘cine star Rajnikant’ – I was admiring the car more, we have seen come him a couple of times arriving in a Priya scooter too !!

The car’s history dates back to 1899 when  at Palazzo Bricherasio, the company charter of Società Anonima Fabbrica Italiana Automobili Torino was signed. Among the members of the Board of Directors, Giovanni Agnelli stood out in the group of investors and won recognition for his determination and strategic vision. In 1902 he became the Managing Director of the company.  Premier Padmini was manufactured in India from 1970 to 1998 by Premier Automobiles Limited, a division of the Walchand Group, under license from Fiat.   It gave a run to the monopoly of Hindustan Ambassadors.

In June 2009, when Chrysler emerged from Chapter 11 bankruptcy protection, Fiat Group received a 20% stake in Chrysler Group LLC and Marchionne was appointed CEO, replacing existing CEO Robert Nardelli. Chapter 11 is a chapter of Title 11, the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation, partnership or sole proprietorship, and to individuals, although it is most prominently used by corporate entities.   Marchionne last appeared in public on June 26, in Italy, appearing fatigued as he presented a Jeep to the Carabinieri, Italy’s military police. FCA subsequently announced Marchionne had taken medical leave for shoulder surgery at the University Hospital of Zürich in Switzerland — adding on the day of surgery he would not return due to post-surgical complications.  On July 21, due to the gravity of his condition, Marchionne was replaced at FCA, Ferrari, SGS and CNH.

The automotive industry lost an icon on 25.7.2018, as Fiat Chrysler Automobiles CEO Sergio Marchionne passed away at age 66. He was extremely well known in the car world.  One among the many who worked under him tweeted knowing as “The Sweater”, perhaps not so much for what he wore but how anyone felt during a meeting with him. The stories about how hard he worked are all true. However, he knew that being absolutely relentless was the only way to turn the company around. He saved the company,  jobs, and  pensions of many of his employees.

Sergio Marchionne (1952-2018) was an Italian-Canadian businessman who was the chairman of CNH Industrial, the chief executive officer (CEO) of Fiat Chrysler Automobiles, the chairman and CEO of FCA US LLC, the chairman and CEO of Ferrari, and the chairman of Maserati. He was the chairman of Swiss-based SGS and vice chairman of UBS from 2008 to 2010, as well as the chairman of the European Automobile Manufacturers Association for 2012 (first elected in January 2006). He was a member of the Peterson Institute for International Economics, and the chairman of the Italian branch of the Council for the United States and Italy.

Noted for his keen observations of the automotive industry, Marchionne's insights ranged from frank criticism of his company's own products to a highly-regarded 2015 presentation titled Confessions of a Capital Junkie, extolling the benefits of industry consolidation. Marchionne was widely recognized for turning around Fiat Group to become one of the fastest growing companies in the auto industry, in less than two years.  In 2009, he was instrumental in Fiat Group forming a strategic alliance with the ailing US automaker Chrysler, with the support of the U.S. and Canadian governments and trade unions. Less than two years later, following its emergence from Chapter 11, Chrysler returned to profitability, repaying all government loans.

Following complications from surgery, Marchionne resigned from all of his positions in July 2018  and died a few days later.  The American business channel CNBC described Marchionne as a "legend of automotive industry", while the British newspaper Financial Times considered him as having been "one of the boldest business leaders of his generation".  After the passing away of the architect who created Fiat Chrysler,  many investors are wondering what his loss will mean for the future of the company.  The news that he was being replaced as chief executive sent shares tumbling earlier this week.  Recently, when  the company published its second quarter earnings, they were certainly disappointing - and exposed significant challenges in China. The shares fell again - more dramatically this time. The question is... would the reaction have been so strong if Mr Marchionne had still been firmly in control?

He had been planning to retire next year - and the new chief executive, Mike Manley, had been widely tipped to succeed him.

Regards – S. Sampathkumar
26th July 2018.

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