Former Volkswagen manager Herbert Demel has signed a contract to become the new chief executive of Fiat’s troubled car unit, an industry source told Reuters on Wednesday.
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“The contracts are signed, the only open question is Demel’s starting date in Turin,” the source told the news agency, which noted that Fiat refused to comment officially.
Reuters said the appointment would put an end to weeks of speculation as to Fiat Auto’s future after an attempt to hire former Ford Europe head Martin Leach was scuppered when Ford refused to release him from a clause forbidding him moving to a rival.
“It’s good to have some visibility on the change of guard and who is going to implement Fiat’s restructuring plans,” a Milan-based analyst told Reuters, adding: “Demel is pretty unknown, unlike Leach, but that’s no bad thing. Fiat had a list of people and if they’ve chosen Demel, we have to wait and see how he does.”
Reuters said that Demel, 49, started his career working on car parts at German engineering group Bosch before moving up the ranks at VW’s luxury arm Audi and then steering VW through the Brazilian crisis from 1997-2002, fighting against market leader Fiat.
He has spent the past year as the head of Austria-based niche car assembler Magna Steyr, part of Canada’s Magna International, which did not want him to leave until early 2004, the report added.
“Demel’s move will not be prevented over this issue,” the source told Reuters. Fiat wants the Austrian manager to start as soon as possible to replace Giancarlo Boschetti, who is due to retire next year, the report added.
Reuters said Demel will have to push through Boschetti’s plan to launch more than 20 new models in three years and get a quick start on the future. Any car Demel plans today will take until 2007 to get from design pad to showroom and there is no time to waste, the news agency said.
Under a plan penned by Giuseppe Morchio, who took over as Fiat group CEO in February, new cars should revive sales and pull Fiat Auto to breakeven in 2005 from a 1.3 billion-euro operating loss last year, Reuters said, adding that the group should break even in 2004.
Demel is one of a string of outside managers to be hired by Fiat, which had a long tradition of promoting people internally but now needs fresh ideas and fewer emotional ties to the past, Reuters said.
Demel – whose first car was made by Fiat-owned Alfa Romeo – is the first non-Italian to be given such a high post in Fiat, the news agency noted.
