The Sergio way

sergio_marchionne.gi.top.jpgFiat's chief executive Sergio Marchionne attends a press conference at the end of "Fiat Investor Day" meeting on April 21, 2010 in Turin. By Alex Taylor III, senior editor


(Fortune) -- How many CEOs do you know who make public their five-year projections, complete with dates and numbers?

How many CEOs in the auto industry do you know who would roll out their five-year product plans by brand and by segment?

And finally, how many CEOs do you know who would preface their projections for the next five years by pointing out where they went wrong during the past five years?

But then, Fiat-Chrysler CEO Sergio Marchionne is, as should be clear by now, not your typical CEO. Marchionne has a determinedly realistic view of the world. In his job, he has no time for preconceptions, industry shibboleths, or rosy scenarios.

In his Investor Day presentation in Turin on Wednesday, Marchionne presented his view of the automotive world.

He sees a pronounced upturn in passenger car sales in Europe -- from the depressed levels of 12.4 million (estimated) in 2010 to a more manageable 16 million in 2014.

Marchionne wants to capture the higher-margin segments of that growing market. So he is beefing up the Fiat Group's presence in compact and large cars and in compact multi-purpose vehicles.

Part of that growth will come from beefing up the Lancia brand by essentially merging it with the Chrysler brand. Lancia, sometimes described as the Italian version of Buick, has been a laggard, and Marchionne hopes to revive it by introducing eight new models in the next five years -- six of them based on Chrysler products.

Marchionne also has big plans for Alfa Romeo -- Italy's Pontiac. He expects Alfa to launch seven new models, with all seven coming to the U.S.

Alfas are expected to be on sale in North America in 2012, and the company expects to be selling 85,000 vehicles here by 2014.

To ensure that these forecasts are accompanied by an appropriate skepticism, Marchionne reviewed the Fiat Group's performance for the past five years in a presentation titled "From Lingotto to LIngotto." (Translation: "Where the rubber meets the road.")

His candor was refreshing. Marchionne had expected both Lancia and Alfa to be selling 300,000 cars a year by now, but neither came close to hitting its target. Instead, Lancia recorded 112,000 sales in 2009, and Alfa just 101,000.

Nor did Fiat expand as quickly in China, India, and Russia as Marchionne would have liked.

Most importantly, Marchionne found that the model for Fiat's European business was "totally inadequate." That's notably because its product line is heavily skewed to mini and small cars, and because its six factories in Italy are running well below capacity.

But Marchionne has plans to close one of the plants and boost production at the five remaining factories to as much as 101% of capacity.

As for the Fiat business model, Marchionne believes he has fixed that by first getting control of Chrysler, and second, beginning the split-off of Fiat Auto from the industrial operations of the Fiat Group.

Marchionne sees Fiat and Chrysler producing six million cars a year by 2014, which he says is the minimum required to be a "competitive global player."

Depending on your point of view, Marchionne may still be setting lofty targets or indulging in wishful thinking. He expects the Fiat-Chrysler link-up to produce Euros 500 million in "synergies" -- always a dangerous word -- by 2014.

And he sees Fiat Group's global auto sales alone nearly doubling from estimated 2010 levels by 2014, reaching 3.8 million units. That's coming in the face of a resurgent Volkswagen and a more aggressive Ford.

Success in the auto business comes from execution, not planning, and Marchionne still needs to prove that he can manage both Fiat and Chrysler as successfully as he managed Fiat alone.

But whether he succeeds or not, Marchionne has set a standard for other CEOs by clearly admitting where he has failed and setting clear targets for the future. To top of page

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