How do you follow Sergio Marchionne

At the end of a now famous presentation in which he rebuked the auto industry for his lavish manners, Sergio Marchionne quoted a significant pbadage from Lewis Carroll's "Through The Mirror".

The Red Queen says a frustrated and exhausted Alice that in her world "it takes all the running you can do to keep in the same place.If you want to go somewhere else, you have to run at least twice as fast!" [19659002] Without Marchionne, who was replaced as CEO of Fiat Chrysler Automobiles NV on Saturday after a sudden deterioration in his health, Italy and the United States ransoms that he stuck together would probably have expired there is a long time under their pile of accumulated debts.

Thanks to the fierce pace that Marchionne maintained for 14 years, often in difficult conditions, Fiat not only survived but thrived. His departure leaves a void that his successor Mike Manley, the head of the Jeep brand, will struggle to fill – no matter who will

With an impending trade war and the auto industry in the midst of An unprecedented technological upheaval, fulfilling Marchionne objectives will be difficult overall. But by reviving Jeep, now the main source of cash for Fiat, Manley has shown a very competent leader. He also inherits from a firm much stronger than Marchionne's in 2004.

Marchionne challenged Fiat's bankruptcy predictions by working harder, allocating capital better and creating more value than his counterparts. peers. During his tenure, he increased the value of Fiat's badets more than ten times.

The fact that he also spoke much more eloquently than most executives, and paid attention to the concerns of investors (not a given in the auto industry) In recognizing the potential of the Jeep brand, by abandoning the luxury Ferrari brand and moving quickly from low-margin cars to more profitable SUVs, it was able to revive Fiat Chrysler, and reduce net debt to zero. The company will probably make a net profit of about $ 6 billion this year, about the same as Ford Motor Co., which is not a trivial matter.

Conscious that Marchionne, who was due to retire in April 2019, was able In June, he made a sleight of hand by presenting new financial targets for the group.

He leaves the scene anyway before the work is done. The new goals are ambitious – perhaps too ambitious. Can Fiat really double its operating profit up to 16 billion euros and generate 30 billion euros in free cash flow in the next five years?

For now, investors do not buy it – Fiat shares are trading results five times lower than those of General Motors, Ford and Volkswagen AG

The heavy investment needed to catch up with electric vehicles (where Fiat is perceived as a latecomer) and the risk of a big American fine on the diesel emissions of its vehicles. In addition, at some point, the already long-in-the-tooth American automotive cycle will end – cycles always do it.

It is possible that Manley decides that the best way to meet all these challenges is to pursue a merger with a peer – as Marchionne tried and failed to do with GM.

Marchionne's badessment in his 2015 "Confessions of a Junkie Capital" remains correct: it's crazy for automakers to spend heavily developing nearly identical technologies, when sharing the burden would be more effective

Without a merger, Manley may find herself in the same situation as Alice: running at double speed to avoid staying still.

To contact the author of this story:
Chris Bryant at cbryant32 @ bloomberg .net

To contact the editor-in-chief responsible for this story:
Edward Evans [19659019] at eevans3 @ bloom berg.net