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Highlights of Marchionne’s speech at Spruce Meadows

by Bill Cawthon on

The following are excerpts from Sergio Marchionne’s presentation last Friday at the 2011 Spruce Meadows Changing Fortunes Roundtable in Calgary, Alberta. Marchionne was a marquee speaker in the 21st year of the business forum.

“The problem of overcapacity … is no longer a NAFTA problem” for Chrysler. “We have taken out every ounce of unnecessary capacity out of the system.” Chrysler has been retooled not to lose money at 10 million SAAR.

“The important thing is to maintain the discipline that the restructuring forced in 2009 and that effectively … is still part of our DNA today. I think the fact that the three heads of the automakers in Detroit today are non-Detroit people … has brought a level of realism to the running of a car operation.”

“I’ll give you four things that fundamentally made it almost a slam-dunk decision to allow Fiat to come in and effectively be given an equity interest in Chrysler. (A) phenomenal arsenal of powertrain technology; access to non-NAFTA markets; number of architectures required to make Chrysler competitive; a proven track record of being able to turn around a car company”

“We have announced now a combined management structure, which is going to lead the Fiat-Chrysler organization going forward. There are people from both sides of the house, and the objective is relatively clear. We’re going to have one global car company that will be managed in a very multi-national, multi-ethnic manner but it will have no stripe in terms of nationality. It can’t have one.”

“We’re going to be selling nearly 4.2 million cars this year. We’re going to be the fifth largest automaker in the world.”

“Chrysler can sell 1.5 million cars a year and not lose money. We’re going to sell two million this year. The difference between the 1.5 and 2 million is $2 billion in profits. And next year we’re going up to 2.4 million cars and we’re going to make over $3 billion in operating profit.”

“The future of this industry is bound to lead to an elimination of marginal players.”

“The car business forgot how to make cars, and it forgot what industrial discipline looks like. … It’s up to us to avoid decay. Decay is a result of an intentional act of neglect. It’s not random, it’s because bad leaders make those calls. And in my view, I think we’ve come a long, long way in rectifying the anomaly by putting people in this business now that know what they’re doing.”

Bill Cawthon grew up in the auto industry in the 1950s. His Dad worked for Chrysler and Bill spent a number of Saturdays down on the plant floor at Dodge Main in Hamtramck. Bill is also the U.S. market correspondent for just-auto.com, a British auto industry publication, and a member of the Texas Auto Writers Association, which has named the Jeep Grand Cherokee the “SUV of Texas” several times and named the Ram 1500 as the “Truck of Texas” two years running.

Bill has owned five Plymouths (including the only 1962 “Texan”), one Dodge and one Chrysler and is still trying to figure out how to justify a Wrangler. He also has owned at least one of every 1:87 scale model of a Chrysler product. You can reach him directly at (206) 888-7324 or by using the form.

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