By on April 20, 2010

Fiat Chairman Luca Cordero Di Montezemolo will be leaving the firm to pursue a career in Italian politics, according to Automotive News [sub]. Montezemolo will remain on Fiat’s board, and will continue to serve as chairman of Ferrari, but he will be replaced atop the Fiat empire by vice-chairman and Agnelli family heir John Elkann. Fiat’s shares rallied considerably this morning, according to Bloomberg Businessweek, but not because Montezemolo is on the way out. Rather, Fiat has finally announced the news that speculators have been waiting patiently for: the firm now confirms that it plans to spin off its auto business.

Details of the spin-off are not immediately available, as Fiat CEO Sergio Marchionne will not be presenting Fiat’s five-year plan until tomorrow. The spin-off is almost certain to center around Fiat, Abarth, Alfa-Romeo, and Lancia, although it appears that there may be a chance that Maserati could be bundled with Fiat Auto as well, despite being traditionally run as part of Ferrari. Fiat’s other industrial ventures, including its farm- and heavy-equipment manufacturing as well as its Iveco commercial vehicle unit will remain behind with the conglomerate. The main benefit of spinning-off Fiat’s auto business lays in future alliances: with a smaller market cap than the entire Fiat empire, a Fiat Auto unit could more easily enter equity exchanges and other alliances. Already holding a 20 percent stake in Chrysler (with up to 35 percent available for free), Fiat will likely use the spin-off to pursue greater control over the Auburn Hills-based automaker. And with Fiat’s auto business already generating half of the sprawling Fiat Group’s revenue according to the NYT, Marchionne clearly expects the newly spun-off unit to be leaner and more profitable. For now though, the most important variable in the future of Fiat auto isn’t even its spin-off or the replacement of its Chairman. Breaking Chrysler’s downward slump is key to Marchionne’s 5m-unit global survival strategy, and the gambit is far from paying off.

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10 Comments on “Montezemolo Out As Fiat Moves Towards Auto Spin-Off...”


  • avatar
    FleetofWheel

    My vague and mostly disinterested perception of the Fiat brand is same I have to a minor brand foreign diet soda. I don’t know much about it and don’t think I am missing out on anything. I suspect that the majority of US car buyers have the same notion.

  • avatar
    Geo. Levecque

    Yes agree with FleetofWheel, When I think back, hey I am a old guy, I think of the terrible FIAT products that used to be here in North America, then I think of Chrysler, more of the same! Not good memories!

    • 0 avatar
      GeneralMalaise

      I, too, am old enough and what I remember were buyers that thought the way to treat a Fiat was to ignore recommended maintenance and basically behave as though they’d bought a Ford Pinto, and an inconsistent dealer service network. I remember my school chum, who’d served in the Army over in Germany, before returning home with his new 850 Coupe, which then proceeded to disintegrate after just 28K miles of 70mph driving at 5900 RPM. It pushed him to drug use… although, come to think of it, he didn’t need much of a nudge… snicker, snicker.

      I also remember my very first new car purchase – a 1974 Fiat X1/9 – and to this day, think of it as my favorite… and I’ve owned a lot of cars, foreign and domestic. Just had to treat her like a loved one, with respect… oh, and change the timing belt every 15K. The X1/9 made the 10 Best car list of several magazines for many years, back in the day.

      And I’ll be placing an order for a Fiat 500 Abarth Essesse at my first opportunity.

    • 0 avatar
      porschespeed

      @GeneralMalaise,

      We may not agree on many things, but that you appreciate the x1/9 is good enough to give you credit as an afficianado.

  • avatar
    PeriSoft

    Why in God’s name would anyone want to pursue a career in Italian politics?

  • avatar
    KingShango

    I still have no idea why Fiat agreed to this whole Chrysler debacle. Chrysler is like a anchor around their neck. Their products are horrible, management is in shambles and the have the stigma of being bailed out and then given to a foreign company. American car buyers just don’t care about Chrysler.
    And as far as Fiat moving into the American market, I’m young enough to not remember their vehicles but I don’t see anything in the line-up that gets me excited. When I’m in the market next year there’s plenty of established brands for me to choose from.

  • avatar
    Robert Schwartz

    I see the hands of the parent company trying to throw the cargo overboard as the storm rages. Fiat-Chrysler is roadkill and they want it to go under without them.

    P.S. It was Johnny’s brother who had the “adventures”.

  • avatar
    fred schumacher

    Until China took over, the U.S. was the world’s largest car market, and Fiat got back into it for a song. There really wasn’t much risk for Fiat. For Chrysler there was no choice. Daimler had ruined what was once a profitable and fast-to-market car company.

    It’s easy to make jokes about the reliability of older Chryslers and Fiats, but that’s not backed by reality. The most common old vehicles on the road today, other than domestic pickups, are Mopar minivans. And today’s Fiats have cutting edge technology and reliability.

    Gas prices are going back up. They’re over $3 in many states, and small cars will be looking good again.


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