Herbert Demel, Austrian chief executive of auto parts maker Magna Steyr, has been chosen to replace Giancarlo Boschetti as Fiat Auto’s CEO. He will need all his experience as well as a period of calm in order to rescue the flagging firm.
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Fiat Auto chose Demel after failing to capture former Ford Europe head Martin Leach. Leach resigned unexpectedly in August, but Ford refused to release him from a clause forbidding him from moving to a rival.
Demel, who left Volkswagen a year ago, brings with him a wealth of product and technology expertise. He began his career with the auto parts division of toolmaker Robert Bosch before joining VW in the 1990s. He presided over its operations in Brazil at a time of profound economic crisis and helped revitalise its premium Audi brand. He is currently running a company that is a major supplier of components to the ‘big three’ – General Motors, Ford and DaimlerChrsyler.
“Demel is a great product and technology expert. With his international experience, knowledge of the markets and ability to create brand value, he will be able to contribute greatly to Fiat Auto’s growth,” chief executive Giuseppe Morchio said in a statement.
His strong knowledge of Fiat’s two main markets, Europe and Latin America, will prove invaluable to the Italian manufacturer. Fiat has a substantial components business, the premium Alfa Romeo brand to expand, and its alliance with GM to exploit. GM holds a 10% stake in Fiat Auto and could end up owning the rest if Fiat exercises an option to sell its majority stake.
After endorsing a capital extension of €1.84 million, the shareholders are getting impatient. Last year, Fiat’s plunging sales placed the Italian industrial group on a net loss of €4.3 billion and it is under great pressure to apply its directive on completely restructuring industrial operations.
Demel will work closely with Giuseppe Morchio, the instigator of a drastic rescue plan to revive sales. However, what the manufacturer needs most is stability – Demel is its fourth CEO in two years.
Success will depend on Fiat giving him the time and the freedom to turn the struggling auto business round.
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