FCA said on Saturday that Manley would execute the new strategy to ensure a "strong and independent" future, but for some investors future M&A remained part of the investment case. Marchionne was due to step down as CEO next year.
Marchionne, 66, had planned to stay on as chairman and CEO at Ferrari until 2021.
Italian media has reported that Louis Camilleri, now a member of Ferrari's board, is expected to become CEO of the luxury carmaker.
The severity of Marchionne's condition following shoulder surgery is unknown at this stage, but a statement by Elakann seems to suggest a poor prognosis.
Fiat Chrysler Automobiles announced Saturday that CEO Sergio Marchionne's health had suddenly deteriorated following surgery and that its board of directors had picked Jeep executive Mike Manley to replace him. Those complications worsened in the hours prior to the announcement, preventing him from returning to work, said FCA. Meetings have taken place today regarding his replacement, with the frontrunner emerging as Louis Camilleri.
A proposal has been put forward for Mike Manley, head of the Jeep company, to be proposed as the new Fiat CEO at the next shareholder's meeting.
At the June appearance, Marchionne also predicted Fiat was about to eliminate its debt.
Elkann issued a statement saying he was "profoundly saddened" by news of Marchionne's health problems. My first thoughts go to Sergio and his family..
Elkann (pictured with Marchionne), a 42-year-old Italian-American, is the grandson of Gianni Agnelli, former head of the Fiat empire, who chairs Fiat Chrysler Automobiles, which owns the Alfa Romeo, Chrysler, Dodge, Jeep, Fiat, Lancia and Maserati brands.
Bernstein analyst Max Warburton, who had often publicly tussled with Marchionne on earnings calls, said a drop in FCA's shares was to be expected.
"The succession plans we have just announced, even if not without pain from a personal point of view, mean we can guarantee the maximum possible continuity, preserving our companies' unique cultures", said Elkann.
"If you haven't got anything to say, don't have a press conference not to say it", was one of his most famous adages. Over the past 14 years together we have lived through successes and difficulties, internal and external crises, but also unique and unrepeatable moments, both personal and professional. The Italian-Canadian was responsible for reversing FCA's seemingly terminal slide into obscurity, returning the company to profitability in 2006.
Marchionne also had a team of leaders who were being groomed to take over the top job to allow for a transition that was to take effect next year.
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