ROME | The extraordinary drive and global vision of Sergio Marchionne, Chrysler's charismatic new Italian-Canadian chief executive, are key assets that will enable Fiat to turn around its ailing American acquisition, insiders at the Turin-based corporation say.
Italian commentators hailed last week's accord giving Fiat a controlling interest in the U.S. car producer as marking a "new season of capitalism" amid speculation that the merger's conclusion could lead Germany's government to cede Opel to Fiat after all, opening the door to forging a trans-Atlantic giant to challenge Toyota's market leadership.
Mr. Marchionne, 56, is expected to apply at Chrysler the same tactics that enabled him to put Fiat back on the road when he took over running the Italian company in 2004 while it was still controlled by the Agnelli family, mired in debt and bleeding $1.58 billion in cash a year.
Mr. Marchionne is Italian-born but grew up in Canada from age 14. The powerful Agnellis, known as Italy's uncrowned royal family, recruited him from SGS, a Swiss certification company in which they have an interest. His trademark scruffy pullover sweater worn at the office and down-to-earth style peppered with expletives contrasts with the usual elegant style of smooth-talking Italian managers, making him a national icon adored across the political spectrum.
The straight-talking executive wasted no time in transferring three top Fiat managers to Detroit last week. Richard Palmer, head of finance for Fiat's auto division, took over the same job at Chrysler. Pietro Gorlier, in charge of Fiat's sales network, is the new head of Mopar, Chrysler's parts subsidiary. Guadalberto Ranieri became head of Chrysler's communication department. Other changes are expected to follow with Mr. Marchionne setting demanding targets to cut costs and model-development times.
"Marchionne wants to enjoy a honeymoon period without spouting any 'blah-blah-blah' about what he intends to do," Mr. Ranieri told The Washington Times. "He is not a 'blah-blah' sort of person."
Industry sources say Chrysler and Fiat development engineers already have been working together for months to explore and discover synergies between the companies' products.
Fiat will provide Chrysler with small cars such as the retro-chic 500 minicar at a time when soaring oil prices and carbon-cutting legislation are boosting demand for them. The pioneering technology in the engine of Alfa Romeo's Mito line will be made available to Dodge, while European drivers will have access to the new Grand Cherokee Jeep planned for next year and the Chrysler rear-drive 300C limousine, both with engines adapted to feature Fiat's eco-friendly multijet fuel-injection booster, according to Giorgio Ursicino, who writes about Fiat for Rome's Il Messaggero newspaper.
"Marchionne knows he has to race against time," the Corriere della Sera newspaper of Milan explained. "He knows that when the debts are eliminated, the costs reduced to the levels of Japanese competitors with factories in the United States, then miracles of technology and marketing have to be performed to give back life to a company that in the last six months has almost halved its sales and which, even before the financial crisis, saw its share of the U.S. market fall from 15 percent to 10 percent."
Mr. Marchionne met Thursday night with Italian Prime Minister Silvio Berlusconi in Rome, officially to present Fiat's sponsorship plans for the Group of Eight nations' summit meeting that Italy is hosting in July. But industry sources said their conversation surely focused on how the Fiat-Chrysler wedding could edge Canadian-Austrian rival Magna International out of the bidding to take over Opel in Germany.
The Fiat-Chrysler alliance will generate a critical mass of more than 4 million vehicles produced a year. Roland Berger, a senior adviser to Mr. Marchionne and a member of Fiat's board of directors, said adding a third partner such as Opel is far from impossible.
"It would be an optimal solution from an economic and industrial viewpoint, because one would reach annual production of nearly 7 million cars," Mr. Berger said. "It's a pity Opel will not be added in. Fiat's industrial plan [for Opel] is the best and most attractive, because it would have given birth to a global group with pan-European roots, very strong technologically, economically and in terms of distribution and image. But we have not heard the last word on this yet."
Turning around Chrysler will take Mr. Marchionne and his team five years, Boston Consulting Group Managing Director Xavier Mosquet predicted.
"First, we will deal with the turnaround, and then we will repay the debt to the U.S. Treasury," Mr. Mosquet told Italy's Sole-24 Ore business daily. "The first step will be transferring Fiat technology to Chrysler, then collaboration on a development plan for the motoring arm and finally the government's exit from the capital, thanks to the replenishment of the exposure to the Treasury. We believe the process will be almost complete within five years."
Fiat historian Valerio Castronovo said the Chrysler deal caps a century of links between the Turin company and the United States, starting from 1909, when Fiat founder Giovanni Agnelli first visited Ford's U.S. factory.
"He was fascinated by what was then called line production and promised himself he would reproduce the modern chain of production in Italy."