Fiat Chrysler's new Europe boss has big tasks ahead

MILAN -- Fiat Chrysler Automobiles' new Europe chief, Pietro Gorlier, must tackle some big problems. They include low profitability, aging products and overcapacity at the automaker's European factories.

Under Fiat Chrysler CEO Mike Manley's revamped management team, Gorlier will become chief operating officer of the Europe, Middle East and Africa region. Gorlier will also retain the role of chief of supplier Mopar's global operations, FCA said in a statement on Monday.

FCA has struggled in Europe. The company reported its first operating profit as Fiat-Chrysler in 2015 after losing money from 2012 until 2014. The region's profit margin was 3.2 percent in 2017. In the second quarter of this year, earnings slipped 6 percent to 188 million euros with a 3 percent profit margin.

Speaking during a July 25 conference call to discuss FCA’s second-quarter financial results, new CEO Mike Manley said the new profitability benchmark in Europe was PSA Group’s improvement to 7 percent-plus margins. FCA's new European boss must be someone who is capable of closing the gap to that new benchmark, Manley said.

Gorlier, whose official title will be chief operating officer for Europe, the Middle East and Africa, will have tough challenges to meet Manley's expectations.

The core Fiat brand is losing sales in Europe as it quits the compact and subcompact segments and relies on its Panda minicar and 500 range. The brand will be reduced to a few models based around an electrified 500 lineup and the Panda minicar, which is now 7 years old and not due for renewal until at least 2020.

Fiat was once one of Europe's top-selling brands but its 4.8 percent market share through August was equal to BMW's 4.8 percent share and just above Skoda's 4.6 percent.

Alfa Romeo has gained traction with its new Giulia sedan and Stelvio SUV but it needs more new models. Its Giulietta sedan is 8 years old.

Maserati also needs new models as its great hope, the Levante SUV, is faltering. The Levante production line at the Mirafiori plant and the Grugliasco factory, which produces the Quattroporte and Ghibli sedans, will be shut down from September 26 to October 5 to reduce stocks. Both plants are near Turin.

Jeep has been a bright spot in Europe, benefiting from the region's SUV boom with vehicles such as the Renegade and new Compass. To make more headway, Jeep needs a smaller model below the Renegade. FCA has said such as model it will come by 2022.

Italy production

Fiat's shrinking sales in Europe means that its plants in Italy, Poland and Serbia have excess capacity. Six of FCA's nine European car factories are in Italy. All the Italian plants are currently using government subsidies to pay workers to stay home part of the time while earning up to 80 percent of their pay.

FCA's five-year business plan for the period 2018 to 2022, presented on June 1, did not specify where and when the new models for the European market would be produced.

Gorlier, 55, replaces Alfredo Altavilla, who stepped down in July after Manley succeeded Sergio Marchionne as FCA CEO.

Gorlier’s ascent to FCA's Europe boss means he is the highest-ranking Italian within the group -- a symbolic step for the Turin-born manager, given the powerful links of Fiat with Italy and his hometown.

After obtaining a master's degree in economics from the University of Turin, Gorlier joined Fiat in 1989 as a market analyst with truckmaker Iveco.

Just after Fiat agreed to buy Chrysler Group LLC in June 2009, Gorlier was chosen by Marchionne to become president and CEO of Mopar brand service, parts and customer care at Chrysler. He led the evolution of Mopar from a U.S. organization to a worldwide brand for all of FCA's aftermarket activities. Gorlier will retain the role as global head of Mopar, FCA said in a release.

Gorlier was appointed CEO of FCA-owned parts supplier Magneti Marelli in 2015. Early this year FCA decided to sell or spin off Marelli. Gorlier will be succeeded at Marelli by Ermanno Ferrari, who most recently served as the head of the supplier lighting division, which is the company's largest business unit.