MILAN, Italy — Fiat chief executive Sergio Marchionne turned around the once-troubled Italian carmaker with a flair for sharply styled small cars and smart industrial alliances — strengths that could come in handy at Chrysler.
Marchionne on Wednesday became Chrysler's CEO, completing a deal for Fiat to take a controlling stake in the failed U.S. automaker in exchange for technology and management know-how.
Chrysler's 42-day stay in bankruptcy court cleansed the company of much of its debt and labor costs, but many analysts say Chrysler's immediate future is bleak. It lost $8 billion in 2008, and sales are down by almost half for the first five months of this year.
Cars designed by Fiat won't make it to the U.S. until late 2010. And even then, there are no guarantees American drivers will want the tiny cars Fiat specializes in.
In the meantime, Chrysler is left with few new vehicles headed to its drastically reduced network of dealers. Its aging model lineup is still heavy with bigger vehicles. And its offerings in the growing small and midsized markets haven't caught on.
So the task at hand for Marchionne is great, but he appears prepared for the challenge and likely has his eye on greater global ambitions.
Since arriving at money-losing Fiat in 2004, Marchionne returned the company to profit with strong designs like the update of the iconic compact 500, or Cinquecento, and by stripping away hidebound layers of management. He has since been quietly seeding Fiat technology to the corners of the globe with alliances to share auto platforms, engine technology and manufacturing capability.
Fiat has entered a joint venture with the Serbian government to revive the nation's only car plant. It makes cars in Russia with OJSC Sollers, formerly Severstal, and in India with Tata. And it recently announced plans to build a car factory with Guangzhou Automobile Group Co. in China that would produce 140,000 cars a year.
Those more than 30 alliances lacked the kind of fanfare that marked the Chrysler deal, finalized under pressure from President Barack Obama's auto task force and with all the drama of a short-lived U.S. Supreme Court stay, but they were sure signs of one of Marchionne's key strategy: targeted alliances to gain entrance into new markets and, significantly, share costs.
"It is very important that he succeeds in pushing ahead the projects he has in India, China and Russia, because these are the growth areas of the future," said Giuseppe Volpato, a professor at the Ca' Foscari University in Venice, Italy, who has written three books on Fiat.
Besides the Fiat brand, the automaker also makes sporty Alfa Romeos, speedy Maseratis and the luxury class Lancia.
But the asset Marchionne and Fiat have most traded on is its FPT Powertrain Technologies, makers of the Multijet line of energy-efficient engines that also will be deployed in the new Fiat-Chrysler alliance.
At the same time, Marchionne also appears to have lost a hard-fought battle to take on Germany's Opel along with other General Motors European assets, though the deal with leading bidder Magna International Inc. has yet to be signed. His goal: put together a company making at least 6 million cars per year, his minimum threshold to survive and thrive the current crisis.