Instead of resigning, Fiat Auto CEO Herbert Demel is solidly in place - but his boss Fiat Group CEO Sergio Marchionne is helping. As of mid-November, Marchionne has assumed informal but direct responsibility for vehicle sales and Fiat Auto network development outside Italy.

In addition, several sources suggest that Martin Leach, the former Ford of Europe president who is now Maserati CEO, could soon join Fiat Auto to take over marketing and product portfolio management, according to Automotive News Europe (ANE).

In the last month, Turin has been awash in rumors that Demel, the first non-Italian to ever run Fiat Auto, was resigning after just 12 months on the job. After extensive interviews with dozens of Fiat sources, ANE traced the flow of events.

On October 28 in Turin the rumour spread that Demel had resigned from Fiat Auto, due to a personal and management style clash with his new boss, Marchionne.

Demel had been appointed Fiat Auto CEO on November 15, 2003 by then-Fiat Group CEO Giuseppe Morchio. But Morchio abruptly resigned on May 30 and was replaced by Marchionne on June 1.

The rumours spread across Europe in early November, as Marchionne toured Germany, France, UK and Spain to encourage national distribution and dealer organisations. Marchionne was accompanied by several Fiat Auto top executives, but not Demel.

As the rumours about Demel became more persistent, Fiat public relations officers unofficially said he had not resigned, saying he was not travelling with Marchionne because he was in Turin working on the 2005 budget.

On November 9, the first press reports of the rumour were published. That forced a Fiat Group spokesman to state "this is pure, groundless speculation. As regards Fiat Auto, no change is being considered for the management of the company."

But such a mild denial had little effect. By November 12, the rumours were much louder. As the weekend started, several normally reliable sources were insisting Demel had resigned, this time for sure.

"He is currently negotiating his way out [of Fiat Auto,]" one source said then.

On Saturday, November 13, Marchionne opened a Fiat Auto steering committee meeting by stating bluntly, "Everything you read in the press in the past weeks on Herbert [Demel] is pure crap. He is and will stay with us."

Participants at the steering committee report that Marchionne said "fixing Fiat Auto is a titanic effort" and added that despite Demel working long hours with total dedication, "he cannot do everything alone."

Marchionne publicly stated at the meeting that he - in complete agreement with Demel - had taken direct oversight for sales and network development outside Italy.

That was so Demel could then apply his complete attention to "fix the industrial side of Fiat Auto," Marchionne said. That needs "to be improved as fast as possible in terms of proper investment allocation, quality of production, industrial complexity simplification and higher grade of systems and components commonalisation," meeting participants quoted Marchionne as saying.

On the podium, Demel smiled, but did not refer to this new power sharing during the full-day meeting, participants said later.

Marchionne did not mention any further power sharing at the November 13 meeting. But some sources suggest that Marchionne could ask Martin Leach to assist Demel with marketing and product development.

Leach had a reputation at Ford as a product development whiz, but any effort to move him from Maserati would be tricky.

Leach was Morchio's first choice to replace Giancarlo Boschetti at Fiat Auto in mid-2003. Leach didn't get the top Fiat Auto job because Ford would not release him in time from a non-compete clause.

After Demel was hired at Fiat Auto, Leach won a court case against Ford on the grounds that because Ford had fired him, the non-compete clause was unenforceable.

At that point, Morchio tried to hire Leach as CEO of both Ferrari and Maserati.

But Ferrari chairman and CEO Luca Cordero di Montezemolo opposed giving up Ferrari and insisted that Leach get only Maserati.

Then two days before Leach was to take over at Maserati June 1, Morchio resigned. Leach took the job, but since the beginning, he has had a direct superior who didn't choose him. In addition, Montezemolo was much more powerful because he had just become Fiat group chairman.

Rumours that Leach could join Fiat Auto are "pure speculation," says Fiat.

But several sources say Leach could arrive at Fiat Auto as soon as year-end or by next spring at the latest.

The September 1 reorganisation of Fiat Auto still has one open first-level management position: the vice president of product portfolio management, a logical fit for a product guru and true "car guy like" Leach.

In addition, sources say, Leach could also assume direct responsibility for marketing at Fiat Auto. That position doesn't exist in the current structure, but is spread between the four brand and commercial directors.

But there could be one new barrier to Leach moving to Fiat Auto. Ford recently filed a new lawsuit against Leach, alleging he had taken sensitive Ford documents. Ford's allegations could become even more significant if Leach joins Fiat Auto, which is a more direct competitor to Ford of Europe than Maserati.

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