Sergio Marchionne's final lap

"In 2004, when you were first introduced to the auto industry, a lot of people were thinking, 'Who the hell is this guy?' Right? I was one of them, frankly," Morgan Stanley analyst Adam Jonas told Marchionne during FCA's Jan. 25 quarterly call with analysts. "We hadn't seen anything like you. You took $2 billion, roughly, and you've turned it into around $72 billion, and more important than that, there are many hundreds of thousands of families across many nations that are better off because of you and your team."

In May 2014, as Marchionne launched a five-year business plan for the combined Fiat and Chrysler, Automotive News graded his first five years atop the formerly bankrupt Chrysler. Marchionne received a composite grade of B+, and he objected, albeit tongue-in-cheek, that the grade was too low during a press conference after the daylong rollout of the 2014-18 business plan.

FCA plans to reveal its 2018-22 business plan June 1 in Balocco, Italy, outside Fiat's historic home in Turin. The site and date have a nostalgic double meaning: Marchionne became CEO of Fiat on June 1, 2004, and Balocco was where he laid out his first five-year business plan for the company. Marchionne said last month that the 2018-22 plan would be carried out by his successor, whose identity would be revealed by the FCA board sometime after the presentation.

So how best to judge the 65-year-old Marchionne's nearly 15 years as CEO of Fiat? Is it by the wealth he's created for shareholders, as Jonas did? Or by the results Marchionne continues to produce from what has grown into FCA, Ferrari and CNH Industrial, whose combined value Bloomberg estimated at about $80 billion?

Either way, the numbers don't properly tell the why and the how of an iconoclast who may not have fundamentally transformed the auto industry as he wanted to, but at least saved a good piece of it. Marchionne declined a request for an interview for this article, so perhaps the best way to judge is to look closely at what he got right and what he got wrong, with the help of his own words.

After all, as Marchionne told graduates of the University of Toledo in May 2011: "People who see only themselves are destined to remain trapped alone within the fragile two-dimensional image of a looking glass. What a person has done during his life should not be measured by what he has achieved for himself, but rather by what he has left behind for others."

Recognizing value

Let's start with Marchionne's bargain of the century: acquiring control of bankrupt Chrysler in 2009 for pennies on the dollar. Nearly a decade on, it's easy to forget that Marchionne agreed to take over Chrysler after virtually everyone else said no, largely because he recognized the global potential of Jeep. Jeep and Ram were the "crown jewels" of Chrysler, Marchionne said, and they needed to be shared with the rest of the world. Under different financial circumstances, that might have happened quicker. But because of Fiat and Chrysler's hobbled finances, it required time.

Letting products age

Within months of taking control of Chrysler, Marchionne met with its dealers in Las Vegas. There, he made the first of what he called "a promise for a promise" — namely, that the automaker would commit to invest in and improve its products if dealers would agree to invest in their stores and improve their business practices with the public. Marchionne has since renewed this promise and did invest in FCA's lineup, especially early on. But the pace of product renewal has steadily slowed. The Dodge Journey, Chrysler 300 and Dodge Charger, among other vehicles, still ride on platforms from the DaimlerChrysler era. Promised luxury SUVs, the Jeep Wagoneer and Grand Wagoneer, have been delayed. The Dodge Grand Caravan, long scheduled to die, was re-engineered and placed back into extended sales service in 2017 because no affordable substitute had been developed to protect the value of the Chrysler Pacifica.

Shareholder rewards

If you held shares of what was then a distressed Fiat holding company on June 1, 2004, and held onto them, your returns would have lapped the broader market several times. Marchionne found a winning formula in stripping off undervalued assets from the Italian industrial conglomerate and monetizing them for shareholders, doing so with what is now CNH Industrial ($20.25 billion) and Ferrari ($22.34 billion). Shareholders enjoyed the fruits of those actions, as they are likely to if the FCA board, as expected this month, spins off parts maker Magneti Marelli.

Unattractive debt

In any cyclical industry such as automotive, the best-run companies take advantage of the good times to weather the bad. FCA hasn't reported a quarterly loss since the third quarter of 2015, but it remains the only major automaker with more debt than cash on hand. The red on FCA's balance sheet was an immediate turnoff to General Motors executives, who rebuffed Marchionne's overtures in 2015 for a potential blockbuster merger with a curt and dismissive response: "Why should we bail out FCA?" Since then, FCA has made strides in paying down its debt. The approximately $3 billion in remaining net debt reported at the end of 2017 was roughly a third of the total in mid-2015, before the spinoff of Ferrari. Marchionne said paying down debt was a priority and pledged to have the net debt wiped out by June 1.

Motivation

In 2009, Marchionne inherited a mess. Daimler and later Cerberus Capital had largely failed to invest in necessary product improvements or modernize the company's industrial footprint. Morale among employees who had survived constant cost-cutting, including several rounds of layoffs, and then the bankruptcy could not have been lower. Marchionne offered the automaker's disheartened employees a path back to potential health — one that demanded long hours, hard work, humility and sacrifice. The employees accepted the challenge. They set to work fixing many of the things that had gone so wrong with Chrysler and its products — improving quality, overhauling 16 vehicles in 19 months, banning rat-gray interiors and fixing manufacturing plants. Their level of commitment and dedication to restore the company to some semblance of health continually surprised Marchionne.

Hubris

After nursing the company back to health, Marchionne saw an opportunity to return Fiat to the U.S. But rather than adding the Italian brand to Chrysler showrooms, where the additional models would have broadened the automaker's lineup at minimal expense, Marchionne sold dealers on the need to keep Fiat separate. He mandated separate European-style "studios," some of which cost dealers up to $3 million, that added overhead and botched the minicar's reintroduction to the United States.

Decisiveness

One adjective that clearly doesn't describe Marchionne is "tentative." Two years ago, industry analysts thought he was crazy to abandon the compact and midsize car segments in the U.S. to go all-in on SUV and pickup production. The risky move put FCA's lineup in a better position for where consumer tastes were heading, but it also arguably left the automaker vulnerable to another spike in fuel prices, as happened in 2008. Marchionne brushed aside the concern that history might repeat itself at the pump, reasoning that fracking had fundamentally stabilized the global oil markets for the foreseeable future. Jettisoning the Dodge Dart and Chrysler 200 freed up working capital and manufacturing capacity that allowed expansion of the highly profitable Jeep and Ram lineups, which are projected to drive record financial returns for FCA this year.

Stubbornness

In 2011, Volkswagen Group scion Ferdinand Piech wanted Alfa Romeo in the worst way. At the time, the Fiat holding company had made years of promises about restoring the Italian brand to its former glory but hadn't spent much on the project and had little to show as a result.

Piech and Volkswagen would have paid top dollar for Alfa Romeo. Instead, Marchionne publicly feuded with Piech and then-VW CEO Martin Winterkorn, even offering an extra $1,000 discount for VW owners who switched to an FCA vehicle. Marchionne refused to sell, choosing instead to sink $6 billion in cash from his highly leveraged automaker into a wildly optimistic resurrection plan in 2014. When the resulting vehicles finally launched, they were late and had quality problems. Alfa Romeo has yet to turn a profit.

Big thoughts

Marchionne has no shortage of people who will disagree with him, but most colleagues, competitors and acquaintances respect his intellect. He is unapologetically emotional — as in 2014, when he choked up reading aloud from a scholarship application from the daughter of an FCA line worker in Detroit. He is also unabashed about questioning the foundations of the auto industry and capitalism itself. His 2015 analysis of the auto industry's wasteful spending habits, "Confessions of a Capital Junkie," was roundly applauded by analysts for its thoroughness and drew quiet praise from competitors, even if they didn't act on it.

Marchionne also has been warning for years that growing income disparity is a threat to capitalism that must be addressed, even as he takes home millions in pay and bonuses each year.

Inopportune words

Marchionne is famous for speaking his mind, sometimes to his detriment.

There was the time, in 2011, when he complained about the government charging FCA "shyster" interest rates on its bailout loans, before apologizing the next day. He called the former Jeep Commander "unfit for human consumption" while some of them remained on dealers' lots.

When the EPA, in the waning days of the Obama administration, alleged that FCA had undeclared emissions software on its EcoDiesel Ram 1500s and Jeep Grand Cherokees, Marchionne angrily protested, His vociferous denials likely factored into delayed certification of the 2017 Ram 1500 EcoDiesel and difficulty winning approval for other vehicles with that engine.

There was also an incident at the 2012 Paris auto show, in which Marchionne appeared to challenge VW's Winterkorn to a fight. The two men never came to blows, at least in public.

Globalization

American Motors, Renault and Chrysler talked about it. Daimler Chrysler was supposed to try, but it botched the attempt and bagged the effort. And Cerberus? It was too busy selling art off the walls to make payroll.

But Fiat and Marchionne have accomplished what those other companies could not: taking Jeep global. Not only have the SUV brand's sales more than doubled under Fiat, but Jeeps are now built and sold in South America, Europe and Asia, unlocking the potential value of one of the world's most recognized automotive brands.

Rejection

In 2015, Marchionne talked as if a tie-up with GM, Volkswagen or some other company was unavoidable. But when nobody else went along with the idea, he was forced to fix up his own house, recasting his lineup into SUVs and pickups in a bid to improve the balance sheet, and the grandiose talk of inevitable mergers faded away.