Fiat Chairman Says Marchionne to Remain Chief Executive
Fiat SpA (F), the Italian carmaker that’s buying U.S. auto producer Chrysler Group LLC, will keep Sergio Marchionne as chief executive officer at least three more years to push expansion, Chairman John Elkann said.
A new business plan for the period will be presented in May, and “there is no doubt” that Marchionne, 61, will carry it out, Elkann said today at a briefing at the North American International Auto Show in Detroit.
Marchionne will be responsible for taking full ownership of Chrysler and building new luxury models to fuel growth. Fiat may spend as much as 9 billion euros ($12.3 billion) to develop and assemble vehicles in Italy, according to people familiar with the project. The moves are part of his efforts since taking over in 2004 to create a carmaker big enough to challenge Toyota Motor Corp. (7203), General Motors Co. (GM) and Volkswagen AG.
Fiat rose as much as 1.2 percent at the close of trading in Milan today. The stock has gained 65 percent in the past 12 months, valuing the carmaker at 8.49 billion euros.
Elkann and Marchionne discussed the need for CEO candidates yesterday during which they pledged not to repeat the hasty terms of Marchionne’s 2004 appointment, when he became the fifth chief at the Turin-based manufacturer in a two-year period.
In May, Elkann named executives such as Richard Tobin, now head of Fiat’s truck and tractor affiliate CNH Industrial NV; Lorenzo Sistino, head of CNH’s Iveco trucks unit; Alfredo Altavilla, Fiat’s European chief; Mike Manley, head of the Jeep brand; and Cledorvino Belini, head of Fiat in Brazil, as managers who have been groomed by Marchionne and could eventually run the Italian car manufacturer.
“We think we have a decent cluster of potential successors at Fiat-Chrysler and my certainty is that my successor will come from the Fiat-Chrysler world,” the CEO said at the event with Elkann today.
Fiat, which holds 58.5 percent of Auburn Hills, Michigan-based Chrysler, said on Jan. 1 that it secured full control in a $4.35 billion agreement to buy the remaining 41.5 percent stake from the U.S. company’s other owner, a United Auto Workers retiree health-care trust. The Italian company expects to complete the transaction this week, Marchionne said.
The Fiat board will meet Jan. 29 to lay out the terms of merging the two carmakers, including the new entity’s organization and the location of its headquarters and main stock listing, Elkann said. The combined company’s name will include Fiat and Chrysler.
Marchionne said the U.S. has a “large claim” to be chosen for the headquarters and that he favors New York as the primary listing for the group, which would also be listed on a second stock exchange.
A merger will enable the companies to pool funds and tighten cooperation between the Italian producer’s Alfa Romeo, Lancia and Maserati brands and the Chrysler, Dodge and Jeep nameplates. Fiat is open to additional partnerships with other carmakers such as PSA Peugeot Citroen (UG) and Suzuki Motor Corp. (7269), Marchionne said today.
Jean-Baptiste Thomas, a spokesman for Paris-based Peugeot, declined to comment. Spokesmen at Hamamatsu, Japan-based Suzuki couldn’t be reached for comment following the end of business hours.
There is less urgency in taking the next step to find a third partner after buying Chrysler “gave us the credentials to be at the table” with the other leading global automakers, Marchionne said. The combined Fiat-Chrysler sold about 4.4 million vehicles last year.