Luca Cordero di Montezemolo, chairman of Ferrari, was absent from the recent board meeting (August 1st) which approved the full merger of the FIAT-Chrysler companies. The board requested share holder approval which has now been granted.
Fiat Chrysler Automobiles (FCA) will be listed on the New York Stock Exchange with an additional listing on the Mercato Telematico Azionario in Milan to follow.
It was way back in 1899 when Giovanni Agnelli, with several co-investors, founded the Fabbrica Italiana Automobili Torino (FIAT). They built a range of motorised vehicles and during the second world war Fiat provided military equipment and vehicles for both the Army and Regia Aeronautica – and also for the Germans.
When Mussolini was overthrown in 1943, the National Liberation Committee forcibly removed the Agnelli family from Fiat because of their association with the former Italian fascist ruler.
Gianni Agnelli wrested FIAT back for the Agnelli family in 1963 and in 1969 the Agnelli and Ferrari families became inextricably united, as FIAT bought 50% of Ferrari.
Enzo Ferrari, recruited a young and dashing Montezemolo as his assistant team manager in 1974. 3 years later, Luca left to run the Italian America’s Cup entry, then managed Cinzano for a while and was an important member of the Italia 90 World Cup Organisation.
Yet during this time he retained a close relationship with the Agnelli family.
In November 1991, Gianni Agnelli appointed Montezemolo as president of Ferrari, whose F1 racing team had lost its way since the death of Enzo. Luca made it his obsession to return Ferrari to its former glory and dominate the Formula 1 scene.
This culminated in unprecedented domination of the sport by one team, following Montezemolo’s decisions to co-opt Austrian Niki Lauda as a consultant, Frenchman Jean Todt, Englishman Ross Brawn and others to bring about the turnaround.
Ferrari won the F1 constructors’ title in 1999, the first time for 16 years and the following year Michael Schumacher took the first F1 drivers’ title for the Scuderia since 1979.
Luca’s loyalty and commitment to the Ferrari cause, elevated him to full blown Agnelli/Ferrari family member and his power base was strong. He was promoted to Chairman of the entire FIAT group in 2004,
FIAT at this time was in a mess and at the same time as Luca’s appointment, Sergio Marchionne was recruited as CEO of Fiat and the impact of his leadership was evident fairly quickly.
He and Luca worked together on the resuscitation project, Montezemolo handled the politicians and the unions, while the commercially astute Marchionne slashed the managerial bureaucracy and focused the business on markets and profit.
Marchionne was the antithesis of an Agnelli/Ferrari leader. His style of management was to deal directly with lower echelon managers and was reportedly horrified when he joined the group to discover the practice of other executives was to communicate with each other through their secretaries.
By quarter three in 2006, the group had delivered a profit of €196M for the year, the first in over 4 years.
Meantime, Luca was now at the zenith of his powers. He had an adoring following amongst the Tifosi and had cheered the hearts of Italian’s home and abroad with the F1 domination of the red team for over half a decade.
Montezemolo’s relationships with the leading Italian politicians had enhanced his circle of influence outside of FIAT and he began to display aspirations of even more nationalistic importance in politics full time.
Under Marchionne’s leadership, FIAT was steaming ahead and regained a foothold in large automotive consumer markets previously lost, Mexico and Australia. Further, the Italian automaker entered into a joint venture in China
Fiat also returned to Canadian and American markets with the new 500 and Marchionne announced in 2008 that to survive, FIAT must become a top 5 global automotive player.
Marchionne saw an opportunity to buy into the bankrupt Chrysler and improve FIAT’s reach even further.
The deal done by Marchionne saw FIAT take a 20% stake in exchange for providing Chrysler with technology platforms to build smaller, more fuel-efficient vehicles in the US and providing reciprocal access to Fiat’s global distribution network.
Marchionne set about reorganising Chrysler, which saw the American company adopt a structure similar to that of Fiat and facilitated the released, in quick succession, of a large number of redesigned or refreshed vehicles.
The cost was minimal. Chrysler plants were simply re-tooled to produce FIAT models for the US and FIAT delivered engine and transmission technology to enable Chrysler to produce the range of new cars.
Luca in the meantime was focused on schmoozing the Italian ruling classes and engaging in big F1 politikiting. He threatened to withdraw Ferrari from Formula 1 and this all meant his eyes were now firmly off the ball when it came to matters of the FIAT group.
Relations between Montezemolo and Marchionne deteriorated, and the FIAT CEO engineered it amongst the shareholders to see Luca was replaced as Group president in 2010, by John Elkann, the grandson of Gianni Agnelli.
Elkann was raised in the US, and is a savvy and shrewd operator.
A short time later the full impact of the global financial crash and the disastrous state of the Italian economy saw the replacement of the Italian political top jobs by Euro Technocrats. This all but ended Montezemolo’s opportunity for high office.
So it is no surprise, that quietly on August 1st 2014, Luca Montezemolo became no longer an officer of the FIAT group. All the ‘old guard’ have left the business, and Luca’s favour with the two great families of Turin, no longer has much value.
It is reported at that meeting, Marchionne was dismissive of Ferrari Road Car divisions present performance. and he sneered that Maserati were making more money than the prancing horse. Ferrari has in the past made big profits, though much of this is derived from brand and imaging rights.
The FIAT board earlier this year, split out from Ferrari the imaging royalties, moving them overseas, apparently for tax purposes. The obvious effect will lay bare the truth in the next year end accounts of Ferrari’s financial performance in production and the racing arena’s.
It is worthy of note, that Marco Mattiacci is a long standing friend of John Elkann, and a commercial operator much after the heart of SergioMarchionne.
Mattiaci today says he wants to replace Ferrari’s 4 year old $6m simulator which he believes to be outdated. Marco will see the Ferrari improve in their off track simulation efforts and CFD, which of course flies in the face of Montezemolo’s persistent demands for ‘the old ways’ involving more track testing time.
Luca has been cutting an ever increasingly lonely figure, as those with the real power behind the FIAT empire.
On August 1st, 2014, the Abu Dhabi based UAEnational airline Eithad Airways confirmed it had agreed to terms with Alitalia, taking a 49% stake in the Italian airline. This deal will be signed and finalized on August 8, 2014.
Current rumours in Italy suggest a certain Luca Cordero di Montezemolo will be the new CEO announced on August 8th. This appears strange, as it would be perceived to be a massive demotion, for the man who is still held dear in the hearts of many Italians.
Yet, whether now or soon, the adopted son of the Agnelli’s, is watching his power at Ferrari, drain from between his fingers.