Evidence of the uncertainty facing carmaker Fiat-Chrysler Automobiles (FCA) came fast on Monday.
News over the weekend that the driving force behind FCA’s growth, Sergio Marchionne, would not return to work after surgery sent the shares down 5%.
It was soon followed by reports that one of the unsuccessful candidates to replace Mr Marchionne, Europe chief Alfredo Altavilla, had resigned.
The new chief is Briton Mike Manley – and he has a tough act to follow.
Mr Marchionne, 66, is in intensive care in Zurich after suffering what the company said were “massive” complications from shoulder surgery.
He was due to step aside next April anyway, but the health crisis has brought to a head FCA’s succession planning and the commitment to a strategy overhaul announced earlier this year.
Mr Marchionne, famous for his signature black jumpers, sharp – but often mischievous – tongue, and workaholic lifestyle, has effectively saved two carmakers from bankruptcy – Fiat and Chrysler.
He also managed to spin-off Fiat’s Ferrari in a stock market listing – something many people had talked about, but not achieved.
“Marchionne is good at execution, strategy and gamesmanship,” said Evercore analyst George Galliers. “It remains to be seen whether Mr Manley is that sort of visionary”.
A accountant and lawyer by training, Mr Marchionne joined Fiat in 2004 after the death of its patriarch Gianni Agnelli.
The Agnelli family were impressed by Mr Marchionne’s turnaround of the Swiss company SGS and were looking for someone to modernise the ailing Fiat empire.
Fiat was Italy’s foremost industrial group, and the new chief trod a fine line between the demands of politicians and union leaders as he began a root and branch reform.
In 2009, he merged Fiat with another struggling business – America’s number three carmaker Chrysler, and hived off its tractor making arm in 2011 to create CNH Industrial. Ferrari was floated in 2016.
By this year Mr Marchionne had managed to wipe out FCA’s near $13bn (£10bn) debt pile, something he described as a “healing” process for two companies that for so long were associated with failure.
FCA’s chairman John Elkann, 42, grandson of Gianni Agnelli and his chosen heir, said this weekend that Mr Marchionne “taught us to have the courage to challenge the status quo, to break with convention and go beyond the tried and tested”.
The job of maintaining that momentum now falls to Mr Manley, 54, previously head of FCA’s Jeep brand. He will have to make good on the company’s big push into all-electric and hybrid vehicles, and execute a new strategy that includes doubling operating profits by 2022 and turning Jeep into a global brand.
‘Concerns will build’
Jeep is arguably the single most important arm within FCA. The division has played an integral role in boosting the company’s earnings growth, said Mr Galliers, and is key to the growth strategy announced earlier this year.
The number of Jeeps sold in 2013 was about 730,000, against an expected 1.9 million for this year, and 3.5 million by 2022.
That success explains why Mr Manley got the top job, say analysts.
Although there is uncertainty, Mr Galliers pointed out that FCA’s succession had effectively been brought forward by about seven months. “We’re in the same position we would be in early next year,” he said.
But doubts persist. Mr Manley “is a car guy, and to manage Fiat Chrysler you need more than just a car guy,” said Ferdinand Dudenhöffer, director of the Center for Automotive Research, in Germany.
And Max Warburton, analyst at Bernstein said: “The downside may be modest, at least in the next 12 months. But long-term concerns will build – Marchionne ran FCA in a command and control style, with constant fire fighting measures.”
Despite the plaudits for Mr Marchionne – and he unquestionably leaves FCA in a healthier state – there was criticism about delayed product launches and a failure to revive some brands, such as Alfa Romeo, quickly enough.
Also, profitability in Europe remains sluggish, and FCA’s competitors are ahead of the game in breaking into the huge Chinese market.
Mr Marchionne had hoped that the costs of FCA’s push into electric, hybrid and self-driving cars could be shared via an industry merger. But his preferred partner, General Motors, rejected his advances.
These are all issues facing Mr Manley, although FCA was quick to point out when it announced his appointment that he would execute the new strategy to ensure a “strong and independent” future.
Add to this mix the concerns about a trade war, competition, and the unrelenting crackdown by authorities on emissions, and Mr Manley’s in-tray is looking full.
Analysts at Barclays said in a research note: “Sergio’s deal-making and political skills will be missed as FCA faces trade-tariff uncertainty… and a constantly shifting landscape in Latin America,” where FCA has big plans to expand Jeep.
One of Mr Manley’s immediate tasks will be to find a new head of its operations in Europe, Africa and the Middle East. Mr Altavilla’s resignation has still to be officially confirmed, although there are widespread reports on both sides of the Atlantic.
Along with Mr Manley and chief financial officer Richard Palmer, Mr Altavilla was a candidate for the top job. It underlines that a changing of guard at the top of FCA will have management ramifications across the group.
FCA’s group executive council was meeting at the company’s Italian base in Turin on Monday, chaired for the first time by Mr Manley. There is a lot to discuss.