Where Would Fiat Be Today Without Sergio Marchionne?

Despite Criticism at Home in Italy, He Saved Auto Division and Made Company a More Global Player

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Second-guessing Sergio Marchionne's management of Fiat has become commonplace in Italy, where he faces nearly as much criticism from detractors as the country's national soccer coach. Many people think they could have done a better job at Fiat than Mr. Marchionne, but Giuseppe Volpato is not one of them.

"We should ask ourselves where Fiat would be today if it did not encounter Marchionne on its road," said the Venice University business school dean, who has written two books on Fiat.

Sergio Marchionne, Fiat
Sergio Marchionne, Fiat

Volpato said that when Mr. Marchionne, who is currently CEO of both Fiat and Chrysler Group, joined Fiat in June 2004, it looked unlikely that the company's auto division could be saved. The most viable pre-Marchionne option was to force General Motors to take over Fiat Auto. The U.S. giant bought 20% of Fiat Auto for $2.4 billion in March 2000 and was contractually obligated to buy the remaining 80 percent.

"If GM had bought Fiat, what would Fiat be today?" Mr. Volpato asked. The likely answer is : closed.

Just look at what GM, which had to file for U.S. bankruptcy protection in 2009, has done to underperforming subsidiaries in the last few years. Hummer was closed. Saab was dumped. Opel/Vauxhall was nearly sold. Fiat would have been lucky to survive.

Fiat has many challenges to overcome, but Mr. Volpato said that because of Mr. Marchionne "it is still alive, kicking -- and owns Chrysler."

Fiat's guidance for this year -- consolidating its share in Chrysler's results -- calls for revenue of more than $80 billion. The resulting trading profit -- operating profit before unusual items -- should be more than $2.92 billion with a net profit of $2.36 billion.

Undoubtedly, Fiat will take a hit from the forecast decline in European new-car sales. Production in Europe, which is mainly in Italy, will suffer. The pain, however, will not be nearly as bad as in the past because Mr. Marchionne has transformed Fiat from being a Euro-centric minicar and subcompact specialist into a more global player with a broader product portfolio and a stronger footprint in North America.

Any credible analysis of Fiat should focus on its global weaknesses -- China and Russia being the two biggest -- because only discussing its Italian activities is simply parochial.

Automotive News Europe

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