August 3, 2011 / 3:58 PM / 7 years ago

Marchionne: next Chrysler CEO likely after 2015

TRAVERSE CITY, Michigan (Reuters) - Sergio Marchionne, the chief executive of both Chrysler and its controlling shareholder Fiat SpA FIA.MI, said he hoped to stay on through 2015 and would groom a successor from within the company’s ranks.

Sergio Marchionne, Chrysler Group LLC. Chief Executive Officer, speaks during a news conference at the Chrysler Casting Plant in Etobicoke May 30, 2011. REUTERS/Mike Cassese

Marchionne, who orchestrated Fiat’s management takeover of the U.S. automaker, has been the architect of Chrysler’s revival after a 2009 bankruptcy funded by the Obama administration.

Some auto industry executives and bankers have privately questioned how long Marchionne could sustain an intense, hands-on management style marked by long workdays and frequent flights between Turin and Detroit.

Speaking at an industry conference on Wednesday, Marchionne said he hoped that a merged Chrysler-Fiat would become one of the industry’s largest global competitors.

“It’s going to be up to the guy after me, after 2015 hopefully,” Marchionne said during a question and answer session at an industry conference. “Maybe a year later, I don’t know. I’m 59 now. There’s going to be a guy after me, that’s for sure.”

Marchionne’s mention of a successor corresponded to a dip in Fiat’s share price. The shares closed 1.73 percent lower at 5.98 euros on Wednesday.

Marchionne later told reporters, in response to a question: “I brought up 2015 as a point of reference. But the last thing we want is speculation about when I’m going to leave. I technically can go beyond 2015.”

The 2015 mark would be a year after Chrysler completes its five-year turnaround plan, which was outlined in November 2009. The plan calls for Fiat and Chrysler to sell a combined 6.6 million cars and trucks by 2014, up from just over 3.6 million in 2010.


A successor to Marchionne will likely come from the newly formed group executive council, a team of 22 Fiat and Chrysler executives that will oversee the integration of the two automakers. The majority of the council is made up executives from Fiat.

“I have always believed that my successor needs to come from the inside,” Marchionne said. “This large management where we have 22 people of nine nationalities ... is designed to be a proving ground.”

The new team was announced last week, shortly after Fiat took majority ownership of Chrysler. The Italian automaker is on track to own nearly 59 percent of Chrysler by year-end.

Through the council, Fiat and Chrysler will have a more active role in the regions, something Marchionne said has been lacking at both companies so far. Marchionne will still be CEO of both companies and will run the North American region.

The team will spend time in Auburn Hills, Michigan — where Chrysler is based — and Turin Italy, where Fiat is headquartered. The council will also spend time in Brazil, where Fiat is a leader in the market, and Asia, a critical region where both companies are lagging.

“The group executive council is a band of traveling nomads and it has to be,” Marchionne said. He said his own schedule would not change and that he would continue to fly back and forth.

“We’re entering an interesting phase here at Chrysler because financially ... we’re going to see a much better 2012 than we’ll see in 2011,” Marchionne told reporters. “We need to get all our ducks lined up.”

Marchionne also said the company is in discussions to reshape its board after Fiat took majority ownership. “It’s to be reasonably expected” that some current board members would leave Chrysler, he told reporters.

“Hopefully by the end of the month, we’ll come to a resolution,” he said.


Separately, Marchionne said that the tone of Chrysler’s contract talks with the United Auto Workers union had been “incredibly productive.” [ID:nN1E76N0DA]

Through its healthcare trust known as the VEBA, the UAW is the other shareholder in Chrysler with just over 40 percent.

He said he was looking for a contract with the union that would keep the smallest U.S. automaker competitive with rivals on labor costs while allowing union workers “to share in the potential wealth.”

Chrysler has the lowest average hourly wage costs of any of the three U.S. automakers because it has the highest proportion of workers at a second-tier wage of about $14 per hour, half of the pay for veteran workers.

Chrysler, Ford Motor Co (F.N) and General Motors Co (GM.N) have signaled a willingness to negotiate some form of profit sharing with the UAW if they can avoid higher fixed costs that hurt the industry during the last downturn.

Reporting by Deepa Seetharaman, editing by Matthew Lewis

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