Marchionne’s successor and his/her challenges

More important than the product plan presented by FCA some weeks ago, it is the person that will replace Sergio Marchionne in April 2019. The succession is for sure a key chapter in the plan the company has for the coming years. It wasn’t included in the presentation but is maybe the real news that all media and analyst are waiting for. Who’s going to be the new CEO and what challenges this person will face?

The current CEO has been in office since 2005 with an absolute power that goes from the biggest deals (Chrysler in 2009) to most simple things like deciding the name of the Jeep Renegade. He is involved in everything and his top executives, the GEC, are more worried about his approval than about their own goals. This way of managing the company has allowed him to accomplish the most difficult tasks and to become a protagonist in the automotive industry.

But everything comes to an end, and FCA is now mature enough to deal with another age. It needs to start thinking of the next step, to bring new technologies and face the new challenges with another way of thinking. Marchionne will leave a company with a solid financial situation and a big potential. FCA is now stronger than in 2005 and this is all the result of his hard work.

Richard Palmer is a strong candidate that has emerged as a key figure among FCA’s top executives. He is the architect of FCA’s financial turn over with the good and bad consequences of this achievement. The carmaker is heading to zero-debt situation which will increase its appeal to potential buyers or mergers. But at the same time his actions has taken the company to lose market share in key markets like Italy, Europe and Brazil. If the goal of the shareholders is to seal a good deal with another carmaker, then Palmer would be the right person to lead the company.

However, the priorities could change under a new CEO. Whatever the company decides to do regarding the 5-year plan, one of the key things it needs to address is its Chinese situation. Fiat could not anything there, while Alfa Romeo is a niche brand. Jeep finally made it but is now facing challenging times due to its positioning as an off-road brand. Chinese car sales are expected to continue growing as a consequence of easier trade conditions.

Daphne Zheng could be the solution to this problem. She is the COO China and a member of GEC since 2017. She is a woman, she is Chinese, young and talented and could be a good candidate especially now when women are beginning to climb in the automotive positions. Her appointment could send a strong message to the markets about China as a new priority for the group.

Other sources point at Alfredo Altavilla as the favorite option for the Agnelli family. Mr. Altavilla has been dealing with the European operations for almost 6 years and have had many positions since he joined the company in 1990. His biggest achievement is to bring back profits to Europe despite the crisis. But during his management the position of Fiat, Alfa Romeo and Lancia has weaken and this may play against him.

Mike Manley was the perfect candidate until Jeep stopped growing. He has done a great job by expanding the global presence of Jeep and bringing more clients and profits to FCA. Actually, he was the most visible face in every motor show or press conference. This changed in the last investor day presentation (now they call it “Capital Markets day”), as Manley had a timid role and didn’t spend a lot of time presenting.

Whoever will be the new CEO, the company will need to face the electrification, autonomous driving and CO2 issues. The plan was shown some weeks ago, but I’m sure that Marchionne’s successor is likely to add some modifications. It is the usual way and it is what the markets are expecting from a new management. More finance or more cars? that’s going to be the question when this person arrives.