Car Industry Novice to Complete Fiat Team

A 52-year-old Italo-Canadian with no managerial experience of the motor industry is expected to be named today as chief executive officer of the carmaker Fiat following Sunday's shock departure of Giuseppe Morchio, architect of the group's still-fragile recovery.

Sergio Marchionne, boss of Swiss inspection and testing firm Société Générale de Surveillance (SGS), emerged as the most heavily tipped candidate after three days of drama at Italy's biggest industrial conglomerate.

The turmoil began on Friday with news of the death of the chairman, Umberto Agnelli. Then Mr Morchio walked out after learning that board members had chosen the Ferrari chief, Luca di Montezemolo, to be the new chairman.

The initial reaction of dazed investors to reports of Mr Marchionne's likely appointment was positive. Fiat shares, which had fallen more than 3%, picked up to close 1% off at €5.75. SGS doubled its net profits last year.

Mr Marchionne, who has been a board member of Fiat for only a year, will need time to get to grips with the group's extensive problems. There is a clear risk that its recovery could stall.

Fiat workers, investors and creditors were pinning great hopes yesterday on Mr Montezemolo, who stressed that he had no plans to alter the course set by Umberto Agnelli and charted by Mr Morchio. "We have to push ahead with the restructuring plan," he told reporters.

Fiat's losses dropped by half last year as the plan began to take effect.

Mr Morchio's other main contribution was to overhaul the top management, bringing in outsiders to bolster a group that had relied on insiders of long standing. Again, Mr Montezemolo was keen to stress continuity. "The team is there and is strong," he said.

Mr Montezemolo's appointment came soon after he had made a speech to fellow industrialists recommending dialogue with trade unions. He thus found himself yesterday in the rare position for a businessman of being welcomed as much by the left as the right.

Piero Fassino of Italy's biggest opposition party, the Democratic Left, called him "one of our best executives".

Prime minister Silvio Berlusconi again floated the idea that Fiat should make more of its Ferrari brand and perhaps apply it to the entire car range.

"I hope Fiat will quickly succeed in once more becoming the pride of Italian industry, perhaps by linking up more closely with Ferrari," he said.

Inside and outside his government, there was dismay at the way in which Mr Montezemolo's appointment had been allowed to provoke the departure of the highly regarded Mr Morchio. According to Italian media reports yesterday, he had hoped to be made chairman as well as CEO.

Several commentators expressed the view that Umberto Agnelli's illustrious predecessor, Gianni Agnelli, who died in 2003, would have handled the affair more tactfully and ensured Mr Morchio stayed. The announcement of a new chairman came far more speedily than observers expected.

Mr Morchio's exit earned him an icy statement from Fiat, noting his decision and letting him go without a word of thanks.

Former Italian president Francesco Cossiga said Fiat's new chairman, already the head of the equivalent of the CBI, will wield "economic and political powers that not even Gianni Agnelli had".