Fiat Chrysler Adapts To Life After Marchionne
NOEL KING, HOST:
Fiat Chrysler is facing a new reality today, life without Sergio Marchionne. The legendary leader who turned around Fiat and saved Chrysler died yesterday. That was the same day the company reported its second-quarter earnings. NPR's Dustin Dwyer has a look at the challenges ahead for the company's new leaders.
DUSTIN DWYER, BYLINE: It's routine for companies to hold a conference call to brief investors on earnings day. But there was nothing routine about the call Fiat Chrysler held yesterday. The company's new CEO Michael Manley, who only took over the job a few days ago, started with a remembrance of his mentor and former boss.
(SOUNDBITE OF ARCHIVED RECORDING)
MICHAEL MANLEY: Now, personally, having spent the last nine years of my life seeing or talking to Sergio almost on a daily basis, this morning's news is heartbreaking. And I know that it will also be heartbreaking for many other people.
DWYER: It was 2009 when Marchionne arrived to take over at Chrysler's headquarters in Auburn Hills, Mich. It was six months after the company was saved by a U.S. taxpayer bailout. Marchionne had already turned around Fiat, and he saw something in Chrysler few others did. Chrysler had just emerged from bankruptcy. Many in Detroit assumed it wouldn't survive. But Marchionne promised Chrysler employees a different future.
(SOUNDBITE OF ARCHIVED RECORDING)
SERGIO MARCHIONNE: It is my great privilege to greet you as your new chief executive officer. Although we have many challenges yet to overcome, there's not a single doubt in my mind that we will get the job done.
DWYER: And they did. Marchionne's words quickly turned to results. The company updated its vehicle lineup and returned to profitability. Fiat Chrysler repaid the billions of dollars back to the U.S. government ahead of schedule and with interest. Nearly everyone credited Marchionne. Rebecca Lindland is an auto industry analyst with Kelley Blue Book.
REBECCA LINDLAND: He had shown that he can achieve what seems to be the unachievable.
DWYER: Among his achievements - profitability for the company. Yesterday, Fiat Chrysler says it earned $882 million for the second quarter, a number totally unthinkable nine years ago. But it's a sign of how much things have changed. That number was actually below expectations. And the earnings point to some major challenges ahead for the company. One, according to Rebecca Lindland, is China.
LINDLAND: China is the world's largest new car market. And FCA really doesn't have the type of presence that it should have in that country.
DWYER: And that was evident in the financial results released yesterday, where Fiat Chrysler, also known as FCA, said sales dropped in Asia. Another challenge - the tariff battle instigated by the Trump administration. Tariffs have already led to higher prices for aluminum and steel for a lot of carmakers. And then there's the possibility of new tariffs on cars, including vehicles imported from Europe. Car companies and their suppliers have united to oppose those tariffs. One of the biggest voices was Sergio Marchionne. Here he is on Bloomberg just four months ago.
(SOUNDBITE OF BLOOMBERG BROADCAST)
MARCHIONNE: I think people need to calm down. I think they need to let blood pressures drop to normal levels. Sit down with the U.S. administration, and find a way out of this thing.
DWYER: Leaders from the European Union did just that yesterday, sitting down with the Trump administration to iron out differences over trade. They made progress. But one thing that was noticeably missing from their agreement - cars. And if that question doesn't get resolved, the tariffs could land squarely on Fiat Chrysler - and on its new leaders.
Dustin Dwyer, NPR News, Grand Rapids, Mich.
(SOUNDBITE OF MEMORY'S "OUTERSPACE") Transcript provided by NPR, Copyright NPR.