Sergio Marchionne and the Fiat Chrysler Merger
Sergio Marchionne was the man behind one of the fastest turn-arounds in automotive history and was also responsible for one of the biggest mergers in the automotive industry between Fiat and Chrysler.
Marchionne was born in Chieti, Italy in 1952 and emigrated with his family to Toronto, Canada when he was 14. Later in his life he was considered a workaholic, but he had proved early on that he was prepared to do whatever it took to succeed. Marchionne studied at the University of Toronto earning a bachelor’s degree of commerce, then received an MBA from the University of Windsor, and after that he pursued a law degree from Osgoode Hall Law School of York University. After finishing school, Marchionne began an accounting career as a Canadian certified general accountant, barrister, and a fellow of the Certified General Accountants of Ontario.
After some time spent in the accounting industry at several financial firms, Marchionne was elected as an independent member of the Board of Directors for Fiat S.p.A. Then, in 2004, he was made CEO by the Agnelli family to help the struggling automaker, Fiat. Under his leadership, Fiat was able to make a successful turn-around in just two years. Shortly after Marchionne took over as CEO, Fiat was able to pay its first dividend in five years.
By 2009, he was already in talks with the U.S. Government about purchasing the ailing automaker, Chrysler. Marchionne was able to drive a hard bargain and purchase an initial 20% stake in Chrysler and by 2014, Fiat had total control of the automaker. Marchionne made an offer to the U.S. Government to buy out Chrysler. Faced with no other decision and the risk of losing a major pillar in the U.S. economy, they agreed.
Once the major merger was complete, the two automakers became one brand, Fiat Chrysler Automobiles (FCA). Marchionne then revealed a five-year plan in 2014, which involved Jeep coming to the forefront of FCA because of its global visibility. Chrysler would become the North American brand competing with Ford, Chevrolet, Toyota, and Volkswagen. Dodge would focus on performance vehicles, and the remaining brands, aside from Fiat and Ram Trucks, were restructured to fit their respective markets.
By the end of 2015, one year into Marchionne’s plan, revenues were already up 18%, earnings before interest taxes (EBIT) were up 40%, and their adjusted net profits were up 91%. A major turnaround for two companies, especially with one that was close to no return. Not to mention, in between the initial acquisition and the five-year plan, Marchionne managed rid the automaker of all outstanding debt in the process.
Marchionne, without a formal automotive background, knew exactly what Fiat and Chrysler needed. He will always be remembered as a hard-working and creative person who also had great spirit for the industry. Marchionne will be inducted into the Automotive Hall of Fame on July 18th, 2019.