Montezemolo Out As Fiat Moves Towards Auto Spin-Off

Edward Niedermeyer
by Edward Niedermeyer

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.

Edward Niedermeyer
Edward Niedermeyer

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  • Robert Schwartz Robert Schwartz on Apr 20, 2010

    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".

  • Fred schumacher Fred schumacher on May 13, 2010

    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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  • ToolGuy Ford is good at drifting all right... 😉
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