Fiat Chrysler (FCA) said that its chief, Sergio Marchionne, is stepping down due to ill health and will be replaced by Mike Manley, head of the group's Jeep brand.
Marchionne, 66, has suffering serious complications following surgery on his right shoulder last month.
The Italian-Canadian executive took the helm at Fiat in 2004 and had already been planning to step down next year.
His duties as head of the luxury carmaker Ferrari will be taken over by Louis Carey Camilleri, CEO of tobacco giant Philip Morris, which has enjoyed four decades of sponsorship to the sports car brand.
Manley, a 54-year-old Briton, has headed Jeep since 2009, as well as pick-up and vans producer Ram since 2015.
In a statement, FCA announced "with great regret that during the week Mr Marchionne suffered unexpected complications as he was getting over an operation, which over the past few hours has worsened considerably.
"As a result, Mr Marchionne will be unable to return to work."
A separate Ferrari statement read: "The board of Ferrari met today has learned with great sadness that its CEO Sergio Marchionne could not resume work."
During his 14 years at the helm, Marchionne has vastly reshaped the automobile group, first by righting the ship at Fiat, then guiding its 2014 merger with US carmaker Chrysler and spinning off luxury brand Ferrari in 2016.
He has worn many hats over this time, including that of head of agricultural machinery producer, CNH.
Replacing Marchionne as chairman of CNH Industrial will be Briton Suzanne Wood.
The Jeep brand has thrived under Manley's stewardship.
Unit sales have soared from 337,000 units in 2008 -- 80 percent in North America -- to 1.4 million last year.
Analysts at Morgan Stanley estimate that Jeep will this year account for some 70 percent of overall group profits.
The premium brand is key to a five-year FCA plan unveiled by Marchionne in June to increasingly focus develop on hybrid and electric vehicles.
FCA's chairman John Elkann, controlling shareholder of Ferrari and the grandson of legendary Fiat founder Gianni Agnelli, will become Ferrari's chairman.
Elkann, CEO of Exor, the family holding company which has a near 30-percent stake in Fiat, 27 percent in CNH Industrial and 23 percent in Ferrari, said he was saddened by the news.
"I am profoundly saddened to learn of Sergio's state of health. It is a situation that was unthinkable until a few hours ago, and one that leaves us all with a real sense of injustice. My first thoughts go to Sergio and his family," Elkann said.
Rival team bosses paid tribute to his work for Ferrari after taking over from former president Luca Di Montezemolo in 2014.
McLaren team chief Zak Brown told reporters: "Sergio did an unbelievable job in the whole Fiat business -– he is an outspoken character, fighting his corner hard for Ferrari,"aa dding he hoped his successor would continue to see the value of Formula One for Ferrari.
Mercedes team chief Toto Wolff dubbed Marchionne "a character and an important personality for Formula One."
Camilleri, born in 1955 to a Maltese family in Alexandria, Egypt, featured prominently in the tabloids last year because of his relationship with British model, Naomi Campbell.
His nomination must be confirmed by shareholders at a meeting which will be held "very quickly."
"As FCA has been looking for a successor for some time, and the successor has participated on drawing up the recently announced five-year plan, the transition could well go ahead seamlessly," Stephanie Brinley, auto analyst with IHS Markit, told AFP.
That transition could also be helped by FCA's record profits last year and Ferrari's strong performance -- a 10-percent increase in sales to 3.417 billion euros ($4.0 billion) and net profit of 537 million euros.