Marchionne plans to continue consolidating Chrysler and Fiat, next by focusing on top management.
There may soon be a game of musical chairs underway in the executive suites at Chrysler and Fiat. Sergio Marchionne, the chairman of the emerging trans-Atlantic automotive alliance says he plans to merge the top management of the two companies.
Observers have been expecting the move in line with the steady integration of the two companies. Fiat will soon own a majority stake in Chrysler, which it effectively took over after the U.S. maker’s 2009 bankruptcy. The move should streamline operations and make it easier for Chrysler and Fiat to effectively operate as one company.
Marchionne said he plans to announce the new management structure, “in terms of leadership pretty quickly,” during an appearance at the Swiss-American Chamber of Commerce, in Zurich.
The two companies already consolidated their financial results at the end of May, following Fiat’s move to pay off its remaining U.S. government loans, which were part of the post-bankruptcy bailout.
Fiat received a 20% stake in Chrysler at that time but has been steadily increasing its hold. It could reach 51% in the coming months, and has indicated that could eventually climb to 70% — or higher.
Marchionne originally justified the decision to take on struggling Chrysler as a way to improve Fiat’s economies of scale. He has indicated his belief that a mainstream carmaker needs at least 4 million units of production worldwide to remain competitive. The move has also opened the door for a comeback into the U.S. market for the Italian maker. It recently re-launched the Fiat brand there with the debut of the little 500 sedan. A revival of the Alfa-Romeo brand is also planned.
Steps to consolidate the two companies are already well underway. A number of Chrysler products are now being sold in Europe through various Fiat brands. The big 300 sedan is rebadged as Lancia’s flagship Thema. Demand for the Fiat Freemont, a repurposed Dodge Journey, meanwhile, is exceeding expectations.
Management consolidation has already begun, in fact. Chrysler brand CEO Olivier Francois also serves as head of the Lancia marque.
The management shake-up should ease pressures on Marchionne, who currently has more than 20 direct reports in the U.S. and a nearly equal number in Italy.