The End of Italy

Marcelo de Vasconcellos
by Marcelo de Vasconcellos

As FCA holds their first annual general shareholders meeting in Amsterdam (after 114 such meetings in Turin), Pirelli has been sold to the Chinese. Pininfarina negotiates its sale to Mahindra. The Italian automotive industry as a whole is in a sad state. The reasons for this are many, but the process of “de-Italianization” of the country’s auto industry continues. In the end, all there could be left is a memory and many homeless ghosts.

Italy gave birth to names recognized worldwide in the automotive industry for their design and sophistication, engineering and fury. It also gave rise to many a brand focused on the simpler side, using a more utilitarian design that nonetheless spawned classics dear to any automotive enthusiast. As to the former, any car lover recognizes names like Ferrari, Lamborghini, Maserati, Ducati; while examples of the former also abound, Vespa, Iso, Innocenti and of course Fiat.

It didn’t start out this way. Società Anonima Fabbrica Italiana Automobili Torino – or F.I.A.T. for short – was founded in 1899 by a group of noble landholders. These people were witness to the growing industrialization in their country and used their resources to slowly control and direct the process. From among these men, Giovanni Agnelli surged as the leader and soon started buying and crowding his partners out. In due course, his family controlled Fiat and do so to this day.

Initially involved in motor racing, Fiat was one of the leaders in the auto world, producing cars for the wealthy. Fiat was the spearhead into the world for the Italian automotive industry and soon set up shop in other countries, licensing their products to be made by local partners (such as in Germany) and even crossed the Atlantic Ocean in 1908 building a factory of their own in New York. Some even say Henry Ford got some of his inspiration for the assembly line watching the processes carried out by Fiat.

As time progressed, Fiat expanded and starting building locomotives, marine and airplane engines. In World War I, Fiat was a major supplier for the Allied forces. The War followed by the New York stock market crash impoverished Italy and the Italian industry changed its focus. The first Fiat 500 – better known as Topolino due to it looking like Mickey Mouse – came out. Designed by Dante Giacosa, it was one of the first people’s car and started to motorize Italy and other countries in Europe.

With the ascension of Benito Mussolini, Fiat was forced to recede back into Italy. It was rewarded by being given large government contracts and produced everything from planes to machine guns for the fascist hordes. Then Europe’s largest maker, it basically stopped production outside of Italy, though Fiat products were still built under license in other European countries.

Fiat’s success led to the development of other Italian brands. Vicenzo Lancia and Enzo Ferrari were Fiat race car drivers who of course went on to establish their own companies. Lancia in particular was very innovative building the first monococque car (the Lambda) among scores of other innovations. Those companies then spawned others. Everyone knows the story of Lamborghini. Ferruccio Lamborghini was a successful tractor maker. He bought a Ferrari and was so unsatisfied with the car (he thought its controls too heavy and a chore to drive) he went to complain to Enzo Ferrari. Enzo told him that if he, Ferruccio, thought he could build a better car, he should. And thus Lamborghini was born.

Fiat’s success also birthed Alfa Romeo in a roundabout way. Jealous of Turin’s success, Italy’s most industrialized city Milan gave rise to that famous marque. It soon went on its way and became successful, establishing itself in racing (Juan Manuel Fangio started in Formula 1 with Alfa Romeo, with whom he won his first titles, then went on to Maserati, Ferrari and Mercedes Benz, winning championships with all) and gracing the garages of people of means. It also worked closely with the famous carrozzieri that were the origins of the famous Italian design houses. Zagato was a preferred partner. Many Alfa Romeo cars carry a Zagato body. So do Lancias and even Fiats. They also sit under other famous names like Bertone, Alemano, Fissore, among others. This is one of the reasons sales of those Italian cars seem unimpressive today. Besides the lower market volumes of the times, Italian cars splinter off into thousands of variations, all wearing carrozzieri’s names and not necessarily that of the makes.

Of course, to supply this budding industry, many suppliers were born. Magnetti Marelli, Comau, Pirelli, Brembo and many countless other recognizable names exist. Like most of the other Italian car makers, many of these suppliers would be incorporated into Fiat in a long drawn out process starting after World War II.

As I mentioned in the beginning of this article, Pirelli was sold off to the Chinese. That was a shock to many in Italy. Pirelli was an early partner of Ferrari and their stories are intimately linked. 7 billion euros (not to mention the 1 billion euro debt) overcame any inhibitions however.

Other emerging nations are also looking to buy into Italian know-how. Mahindra is negotiating to buy Pininfarina (also closely associated to Ferrari and Fiat). Year after year of losses, debt (160 million euros) is high and the Indians could possibly soon see better looking cars on their streets. Pininfarina would have a lot of work as Mahindras are not exactly known for their stunning design.

It’s not just emerging market companies taking away Italy’s industry piece by piece. Local European vultures, or rather, partners, are also eating up the Italian industry slowly. Volkswagen has been a major profiteer or investor, depending on your point of view. It now owns Italdesign, former company of Giorgetto Giugiaro. Audi has raided Lamborghini and Ducati. Mercedes Benz has a large stake in MV Augusta. Even PSA has carved out a chunk of Bimota. In the case of the motorcycles, it’s been said the Germans are mostly interested in the light welding techniques the Italian companies use for engines and transmissions.

American companies have also taken chunks out of Italy. In 1970, Ford bought the Ghia design house, famous for VW’s Karmann Ghia, the Volvo P1800, quite a few Chryslers, and countless Fiats, Alfas and Lancias. Sadly, at Ford, Carrozzeria Ghia became a trim line and has since been forgotten in the group, being replaced with the rather more pedestrian sounding Titanium.

Ford’s interest in Italy is historic. In the mid part of the last century the Americans had a showdown with Ferrari. Interested in buying Ferrari, Enzo and Henry Ford II played power games which led to entertaining one upmanship like the famous Ford GT40 LeMan victories. On the business side, the potential loss of Ferrari led the Italian government to softly nudge it into the all-encompassing embrace of Fiat. The Italian government’s goal at the time was to strengthen the country’s auto industry.

The current piecemeal parting of Italy’s home auto industry is partly the result of recent governments’ lack of interest. At least Luca Ciferri over at Automotive News Europe thinks so. He cites the bailout of General Motors and Chrysler as examples of a government protecting its industry. He also mentions France’s recently increased 14% stake in PSA to help it ride out the current crisis. Germany fights tooth and nail whenever the EU makes moves that the Germans perceive as threatening to their makes. The British have set up a highly successful action plan, government backed, that has the UK again as one of the largest European car producers.

Meanwhile Ciferri asks, what has the Italian government done? In 2007, they had a sort of clash for clunkers scheme. Due to that program the Italian market peaked at 2.5 million units and has since been halved.

Government action or inaction isn’t the only culprit. Bertone, the reputed carrozziere and design house of Marcello Gandini fame – Miura and Countach, among many others – went bankrupt without even being taken over. Fiat’s ongoing challenging market perception and Magnetti Marelli electronics’ reputation have also been a problem. However, larger trends and currents are at play. Surely part of the problem for the Italian automotive industry is Italy’s economy itself. Recently one the “I’s” in the infamous PIIGS club, many analysts claim Italy’s economy is much larger than officially measured as a heavy government hand drives many businesses into the informal market. The adoption of the euro has not done Italy many favors. In the past, the country could hide inefficiencies behind successive lira devaluations. This is not possible any more. At the turn of the century, Italy was the fourth largest car market in the world. Today it is not even in the Top 10.

As the annual general meeting unfolds in Amsterdam and FCA CEO Sergio Marchionne again beats on his consolidation drum aiming to strike that one last deal, the halls in Turin will be dark. Ghosts of the past walk those halls reminding us of a certain flair, a peculiar lifestyle, a particular way of doing things. Around the world, other people will be using the names of the brands that promised and offered this Italian style to consumers. Ideas will be discussed in other languages, not the original. Documents will be drawn up and plans presented in foreign tongues. If those companies keep the promise of the dolce far niente lifestyle the creators of those marques created, it could strengthen that ideal. However, much is always lost in any translation. A Lamborghini dreamed in German is not the same as one imagined in Italian.

A part of the variation in the auto world is being lost. A peculiar taste and flavor will be lost. And we will all be the poorer for it.

[Image credits: Przemysław Jahr via Wikimedia Commons, Icarus83 via Wikimedia Commons, Tony Harrison (Flickr: AutoItalia Brooklands May 2012 THP_7123) [ CC BY-SA 2.0], via Wikimedia Commons]

Marcelo de Vasconcellos
Marcelo de Vasconcellos

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  • NN NN on May 08, 2015

    Well done piece, Marcelo. Yet, as we sit here, today in the USA we have more Italian-made cars to choose from then we have ever had in my lifetime (born 1980, right as Fiat was exiting the market). The Jeep Renegade sales from last month alone probably equal the total amount of Italian cars sold stateside in 2010. Add the Fiat 500x (the only Italian made Fiat) and the Maserati presence which has grown exponentially since the Ghibli arrived, Alfa making a comeback (all Italian-made, thanks to Marchionne, and IMO the right decision), and of course the few Ferrari's and Lambo's that have always been here. Despite FCA headquarters being located in Amsterdam, is any real product decision making done there? What has happened, and continues to happen, is deep pocketed global organizations understand the value of The Brand, and realize that much of The Brand's value is derived from the particular character that it's heritage and origin bestow upon it. The result is not the hollowing out, but rather the re-emergence of vehicles with national character that support their brand's history, simply financed by foreigners under more sustainable business circumstances. It's good business, because people will pay much, much more for a "real" Fiat than a similar but "soul-less" Geely. Thus, we have more British models, with more British character, than ever before available to global (not just local) consumers--just financed by the Indians. Same is happening with Italian cars, with financial support coming from wherever Sergio can dig it up. I, for one, look forward to buying a reincarnation of the Alfa 159 should one ever become available in the US.

  • GeneralMalaise GeneralMalaise on May 08, 2015

    Interesting post, Marcelo. I'll be FIAT fan for the rest of my years. I've owned a lot of cars, both American and foreign, mostly good, some bad. The most enjoyment - by far - has been found in owning and driving my X1/9s and now my Abarth. Just something about them.

  • CanadaCraig You can just imagine how quickly the tires are going to wear out on a 5,800 lbs AWD 2024 Dodge Charger.
  • Luke42 I tried FSD for a month in December 2022 on my Model Y and wasn’t impressed.The building-blocks were amazing but sum of the all of those amazing parts was about as useful as Honda Sensing in terms of reducing the driver’s workload.I have a list of fixes I need to see in Autopilot before I blow another $200 renting FSD. But I will try it for free for a month.I would love it if FSD v12 lived up to the hype and my mind were changed. But I have no reason to believe I might be wrong at this point, based on the reviews I’ve read so far. [shrug]. I’m sure I’ll have more to say about it once I get to test it.
  • FormerFF We bought three new and one used car last year, so we won't be visiting any showrooms this year unless a meteor hits one of them. Sorry to hear that Mini has terminated the manual transmission, a Mini could be a fun car to drive with a stick.It appears that 2025 is going to see a significant decrease in the number of models that can be had with a stick. The used car we bought is a Mk 7 GTI with a six speed manual, and my younger daughter and I are enjoying it quite a lot. We'll be hanging on to it for many years.
  • Oberkanone Where is the value here? Magna is assembling the vehicles. The IP is not novel. Just buy the IP at bankruptcy stage for next to nothing.
  • Jalop1991 what, no Turbo trim?
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