Fiat Says Chairman Stepping Down

Automaker announced its chairman is stepping down, with Italian media reporting that Agnelli family heir and Fiat vice chairman John Elkann will take the helm.

TURIN, Italy (AP) -- Italian automaker Fiat, which controls Chrysler LLC, announced Tuesday that Agnelli family heir and company vice chairman John Elkann is taking over as chairman in a move that fed speculation about the possible spinoff of Fiat's auto business.

Fiat SpA said at a news conference at its Turin headquarters that its board will formally approve the pick of the 34-year-old Elkann to replace Luca Cordero di Montezemolo at a meeting on Wednesday. Later in the day, Fiat is to present a five-year business plan, including new models and tighter integration with Chrysler.

"Tomorrow is an important day for Fiat and for me. I am very proud, I am happy for this, recognizing all of the many people who helped and supported me in these years. I am also grateful to my family for the trust that they have given me," Elkann told reporters.

"Of course, I am thinking today of my grandfather, and how much I would have liked if he could have been here with us," the auto dynasty family heir said.

Fiat CEO Sergio Marchionne, who has led the company's turnaround since taking over in 2004, the year after the death of Elkann's grandfather and longtime Fiat chairman Gianni Agnelli, will remain in his position as chief executive of both Fiat and Chrysler. Marchionne said the five-year business plan would be "ambitious," but he declined to provide any details ahead of the presentation.

Marchionne has said Fiat's position on a spinoff would be clarified in the business plan. Asked if Elkann's appointment indicated a spinoff was imminent, outgoing chairman Montezemolo responded with a curt: "No".

Analysts believe that carving out Fiat Auto from other Fiat Group businesses — like making trucks, agriculture and construction equipment — and eventually combining it with Chrysler as a separate company make business sense.

Fiat shares continued their rise throughout afternoon trading on the appointment, jumping 9.28 percent to euro10.42 ($14.05).

Earlier Tuesday, Montezemolo, who has helped mentor Elkann in his role as chairman since 2004, announced he was stepping down.

He said he waited until the company was healthy and an Agnelli was ready to step in to make the move. Montezemolo became chairman after the death of Gianni Agnelli's brother Umberto, the last Agnelli in the position.

"Today, Fiat is a healthy and competitive company that has grown in all its sectors," Montezemolo told reporters. "There's no more drama about the company being close to bankruptcy."

The Agnelli family owns the controlling stake in Fiat, which was founded by Elkann's great-grandfather and was run for decades by the dapper Gianni Agnelli, known in Italy as "L'Avvocato," or "The Lawyer." It had long been expected that Elkann, who joined the Fiat board at 22 and was appointed vice chairman in 2004, would take a greater leadership role.

Elkann has served on the board since December 1997, and his appointment as vice chairman followed the arrival of Marchionne, who turned the company around after years of financial losses and who is now striving to make Fiat a global automaker producing 5.5 million to 6 million cars a year.

The deal to take an initial 20-percent stake in Chrysler last year was a key step, and the business plan Wednesday is expected to provide greater details on his strategy for the alliance.

Over the last six years, Elkann has been working closely with Montezemolo and other executives to learn the ropes, and keeps an office in the same wing of Fiat's headquarters in Turin as Marchionne and Montezemolo.

Elkann also heads the family's Exor holding company, through which the Agnelli heirs hold a controlling 30 percent stake in Fiat and other interests, including the Juventus soccer team and La Stampa.

Montezemolo has also chaired Ferrari, which is majority owned by Fiat, since 1991 and was also its CEO until 2006. He previously served as chairman and CEO of Maserati, another Fiat brand, as well as president of Italy's industrial lobby Confindustria.

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