Montezemolo: In driver’s seat

Turin, May 31 (Reuters): Italian car-maker Fiat, still mourning the death of the last senior member of its founding Agnelli family, was plunged into turmoil on Sunday when its CEO suddenly quit moments after a new chairman was named.

The Agnellis, who control Fiat with a 30 per cent stake, moved quickly after Umberto Agnelli died of cancer on Thursday, handing the top job at Italy’s biggest industrial group to the head of its sports car unit Ferrari, Luca di Montezemolo.

Chief executive Giuseppe Morchio, generally respected by investors for his plan to pull Fiat out of its worst crisis, said in a statement that he would leave the company immediately in protest at the board changes.

Sources in Fiat’s hometown of Turin said Morchio and Montezemolo were both forceful characters who may have clashed. Agnelli had given Morchio a free rein to whip the family company back into shape when he was hired in 2003.

Fiat said its board would choose a new CEO on Tuesday but the shock resignation, the day after Umberto Agnelli was buried, means a totally new team will now take over delicate discussions with creditor banks and partner General Motors.

Promoting Montezemolo, one of Italy’s most prominent businessmen, to the chairman’s seat from Ferrari was a sign that the Agnellis are still committed to the car-maker their ancestor founded 105 years ago but which has slumped into crisis.

Three younger Agnellis were named to the board. John Elkann, the 28-year-old heir of Fiat’s flamboyant patriarch Gianni Agnelli who died last year, will be vice-chairman. Umberto’s son Andrea Agnelli and another cousin will take board seats.

Morchio’s four-year turnaround plan for Fiat, drawn up with Umberto Agnelli, is starting to bear fruit but a lot still remains to be done at the tractors-to-power generation group.