Marchionne, Fiat execs tighten grip on Chrysler under unified management team

Sergio Marchionne, CEO of Fiat S.p.A. and Chrysler Group LLC, will retain oversight of the two automakers in North America under a single management team dominated by Fiat-bred executives.

Four regional chiefs will be in charge of Fiat and Chrysler operations in North America, South America, Europe and Asia effective Sept. 1. They will be part of a "group executive council" of 22 managers, including the CEO, Fiat said in a statement Thursday.

Fourteen executives will come from the Fiat side, including three currently in positions with Chrysler. Five of the named executives were with Chrysler before Fiat rescued the U.S. automaker through a 2009 bankruptcy.

Michael Manley, who runs the Jeep brand, will be in charge of boosting sales and profit in Asia. Gianni Coda, head of purchasing at Fiat, was appointed to run operations in Europe, Africa and the Middle East. Cledorvino Belini, head of Fiat in Brazil, will oversee South America, Fiat's most profitable market.

Saad Chehab, the brand communications chief behind Chrysler's now famous "Born of Fire" Super Bowl ad, has been named head of the Chrysler brand. He will also run Lancia.

Chehab, hired by Marchionne after the bankruptcy, takes over for Olivier Francois, who becomes brand chief for Fiat. Francois will also remain chief creative officer.

Manley will also retain his top role at Jeep. And Reid Bigland will keep charge of Dodge.

Other Chrysler executives named to the newly formed council include Doug Betts, head of quality, and Bob Lee, who oversees powertrain coordination. Pietro Gorlier remains the leader of the Mopar parts unit.

Among the 22 executive committee members are some who worked with Marchionne when he started considering the Chrysler alliance in 2008. They include Stefan Ketter, as head of manufacturing technology; Harald Wester, who has been head of Fiat engineering; Alessandro Baldi, head of Fiat's treasury, who has been on Marchionne's staff for more than 20 years, and Alfredo Altavilla, who is also a Chrysler director.

Marchionne also put executives on the panel who helped him turn around Chrysler, including Richard Palmer, who becomes chief financial offer of the group.

"We have now reached the right moment to step on the accelerator of the Fiat-Chrysler integration," Marchionne said in the statement. The council is the highest decision-making body at Fiat outside of the board of directors, according to the statement.

Marchionne, 59, aims to merge the automakers to reduce costs and achieve a target of more than 100 billion euros ($140 billion) in revenue by 2014. He said in May that the timing of a merger hasn't been decided, adding that it's not likely this year.

"Marchionne's decision to keep the role of overseeing the business in North America shows that the center of gravity of the combined entity will be in the U.S.," said Gianluca Spina, chairman of the business school at Polytechnic University of Milan. "The integration process is going extremely fast, as is Marchionne's style."

Fiat and Chrysler is now a "fully consolidated group," Exane BNP Paribas analyst Thierry Huon said in a research note this week. "We acknowledge that management has done a very good job of putting Chrysler back on track, but we believe that the profitability of this venture in the short term is still too dependent on Brazilian and U.S. car demand."

"We have gone through a pretty long dating period here, over two years to get know the organizations and we've established all the right relationships between the two organizations to now implement an integration plan," Marchionne said earlier this week in a conference call with analysts.

Fiat increased its Chrysler stake to 53.5 percent July 21. The Italian carmaker expects to hold 58.5 percent of the third-biggest U.S. automaker by the end of 2011, after obtaining a 5-percent stake in return for developing a 40 mpg car for Chrysler.

The UAW's retiree health-care trust, a voluntary employee beneficiary association or VEBA, will hold the remaining 41.5 percent stake. Marchionne will end up paying about $2 billion to reach the 58.5 percent holding.

Fiat disagrees with the VEBA about the value of Chrysler, Marchionne said this week. Selling its stake in capital markets remains the best way for the VEBA to "monetize" their interest, he said. Fiat has enough cash for the purchase, the CEO said.

Fiat revised its full-year earnings targets this week after consolidating Chrysler from June 1. Fiat forecasts 2011 earnings before interest, tax and one-time items, which it calls trading profit, of about 2.1 billion euros ($3 billion) and revenue of more than 58 billion euros.

By Automotive News