Recent weeks at Fiat have seen almost unprecedented turbulence at the top, with the appointment of a new chairman and the fifth CEO in three years. For Karl Ludvigsen these events have a personal edge. He assesses the new setup at Fiat and pinpoints the thrust that its new boss, Luca di Montezemolo, can and must bring to the group.

The death in May of Umberto Agnelli was poignant for me personally. I’ve thought of ours as parallel lives in the world of cars. We were both born in 1934, Umberto a few months later than I. We first met in the late 1970s when he visited Fiat Motors of North America, where I was a senior executive. He and his brother took a close interest in our struggles in the troublesome American market. I subsequently saw Umberto a few times in Europe, most recently at the Geneva Salon, where he didn’t look like a man on his last legs. My photos of him there, with Giorgetto Giugiaro, are among the last ever taken of Umberto.


Gianni would have been both surprised and pleased by the way his 13-years-younger brother dealt with Fiat’s problems after his death in March 2002. Umberto had often seemed the ultimate pragmatist, swayed by the demands of the day. At times he seemed ready to jettison the autos unit if it seemed likely to pull down the rest of the Agnelli empire, while Gianni more consistently supported autos, the business founded by his grandfather of the same name that provided the foundation of the family’s wealth.


Previously, in the 1970s, Umberto Agnelli had been active at the top of Fiat as managing director to his brother’s chairmanship. This was the period of the Group’s diversification, giving it the broader base that still supports it today. Umberto flirted with politics in 1976, achieving election to the Senate, but found a frosty atmosphere in Rome and soon returned to Turin to resume his managing directorship. These were the poisonous and dangerous years of the Red Brigades in Italy, when it was a courageous act to be a prominent industrialist. In 1980 Umberto stepped down in favour of hard man Cesare Romiti. In the next ten days Fiat’s shares rose almost ten percent – a harsh verdict on the younger Agnelli’s stewardship.


After Gianni’s death Umberto more than made up for these vacillating years with his staunch support of both Fiat Auto and his no-nonsense choice as the Group’s chief executive, Giuseppe Morchio. The younger Agnelli deserved credit for persuading his family to stump up 250 million euros to bolster their company’s capitalisation. ‘He has impressed me with his deep love of Fiat,’ said Morchio of Umberto, ‘the sense of duty, of responsibility and the spirit of service. I will miss him a lot.’


Now Umberto is gone and with him Morchio as well. The latter cared little whom he offended in his effort to sanitise Fiat, knowing that an Agnelli was there to support him. Without Umberto he was vulnerable, especially to one of the Group’s managers he had most offended, Luca Cordero di Montezemolo. The two had struggled over the role of Luca’s Ferrari-Maserati group, with di Montezemolo successfully defending his turf. Having been denied the chairmanship of Fiat by the board, and knowing that di Montezemolo was arriving above him, Morchio made a hasty and indeed undignified exit.








Giugiaro & U Agnelli 2004

Di Montezemolo’s Group role is aided by the fact that he’s been on the board of Fiat for some months now. Another newcomer to the board is Sergio Marchionne, whose career has been so low-key in Italian terms that Luca’s reaction on hearing of his board appointment was ‘Marchionne who?’ Since then he’s obviously gained a better appreciation of Marchionne, whom he named as the new chief executive only a weekend after Morchio flounced out. The 52-year-old CEO of a Swiss testing and inspection company will need all his supposed turnaround skills to maintain the Agnelli-Morchio team’s momentum.


Luca and I go back a while too. As head of Fiat’s public relations at the end of the 1970s he was the counterpart in Turin of my activities in America. He is supernaturally bright, incredibly focused at all times and – importantly for his present job – he can talk for Italy. His background and experience in public-facing activities will be a huge asset as he comes to grips with the governmental and union problems that Fiat is facing. This must be Luca’s task while Sergio Marchionne concentrates on operational problems. Di Montezemolo will balance his new job with his responsibilities as the head of Ferrari-Maserati and, since March, the Confindustria, Italy’s equivalent of the CBI.


Ironically it was Luca’s election to head the Confindustria that had already led him to make the management changes in his own group that now allow him to transition to Fiat’s top job with ease. He’s given Frenchman Jean Todt more authority at Ferrari and Briton Martin Leach the responsibility for Maserati, having fought off Morchio’s attempt to put Leach above both his brands. Leach, you’ll remember, was to have taken over Fiat Auto until Ford enforced the non-compete clause in his contract. Hired instead for that job was Herbert Demel, who looks secure enough.


Luca di Montezemolo is an outstanding choice to chair Fiat. Like Giovanni Agnelli he’s dubbed ‘Avvocato’ by his staff, by virtue of having studied law. As the boss of hyper-successful Ferrari he has charisma to spare. He also has a record of achievement there, not only in racing but also on the production side. Before he arrived, Ferraris were sexy toys but not serious cars. Luca made Ferraris even more sexy, if anything, and at the same time raised their quality enough to allow them to be daily drivers. This shows that he has the focus that Fiat, Lancia and Alfa Romeo desperately need: close attention to quality. Without much-improved quality, all three marques will slump back to the status of third-world products. They’re perilously close to that already.


In his new post Luca di Montezemolo will be in the eye of the public and press as never before. His personal side interests, such as Tod’s shoes, will be the subject of fervid speculation. So will his relationship to the Agnelli clan. When he was Ferrari’s racing manager in the mid-1970s, many thought he was related to the Agnellis, a perception he would have been foolish to disabuse. He’s said not to be, though he played with the younger Agnellis as a child. But if in fact he’s the secret love child of Gianni Agneelli – another product of Italy’s world-class rumour mill – he can expect it to come out. For di Montezemolo the roar of the Formula One pit wall will be as a whisper to the tumult that his rise to the top of Italy’s biggest firm will generate.


Karl Ludvigsen is an award-winning author, historian and consultant who has worked in senior positions for GM, Fiat and Ford. In the 1980s and 1990s he ran the London-based motor-industry management consultancy, Ludvigsen Associates. He is currently an independent consultant and the author of more than three dozen books about cars and the motor industry, including Creating the Customer-Driven Car Company.