Tags: Ferrari | Fiat | Chief Executive | Montezemolo

Ferrari Chairman Quits to Leave Fiat's Marchionne in Driving Seat

Wednesday, 10 Sep 2014 07:47 AM

Ferrari Chairman Luca Cordero di Montezemolo is quitting the Italian sports car maker to be replaced by the boss of parent group Fiat, Sergio Marchionne, after the two auto industry heavyweights clashed over strategy and the Formula One team's poor results.

Long-serving Montezemolo, a protégé of Fiat's founding Agnelli family, will formally step down on Oct. 13, the day that Marchionne plans to list the newly merged Fiat Chrysler Automobiles (FCA) in New York, Fiat and Montezemolo said in separate statements.

Under Montezemolo's tenure, Ferrari raced to the front of the Formula One grid, increased revenues tenfold and tripled sales volumes, helping the Italian family business become one of the world's most powerful brands.

But his relationship with Marchionne had soured in recent years because of disagreements over the role of the luxury sports car business within the Fiat group, people with knowledge of the situation said.

Chairman since 1991, Montezemolo has wanted to keep Ferrari autonomous, while Marchionne has pushed to better integrate the business within Fiat to boost the group's move into the premium end of the car market as it seeks to rival the likes of Volkswagen and BMW.

Marchionne said on Wednesday that he and Montezemolo, who has been tipped to become chairman of airline Alitalia, had discussed the future of Ferrari at length.

"Our mutual desire to see Ferrari achieve its true potential on the (Formula One racing) track has led to misunderstandings, which became clearly visible over the last weekend," he said, referring to the lack of a Ferrari driver in the top three at an Italian Grand Prix for the first time since 2008.

For Montezemolo, meanwhile, the Chrysler marriage clearly played its part.

"This is the end of an era and so I have decided to leave my position as chairman after almost 23 marvelous and unforgettable years," he said.

"Ferrari will have an important role to play within the FCA group in the upcoming flotation on Wall Street. This will open up a new and different phase, which I feel should be spearheaded by the CEO of the group."

A note from UBS analysts said that Montezemolo, 67, had become "increasingly marginalized as he had been opposed to the takeover of Chrysler back in 2009 ... the last straw was probably a disagreement with Fiat about future growth."

INVESTOR APPEAL

Marchionne, who has been running Fiat since 2004 and revived its fortunes through the tie-up with Chrysler, now wants to flash the Ferrari card to attract U.S. investors when the group makes its debut on Wall Street.

Fiat shares rose 2.6 percent to 7.89 euros by 1041 GMT on Wednesday, with the market speculating that Montezemolo's exit could open the door for a spin-off and listing of Ferrari, a move Marchionne has repeatedly ruled out. Analysts value Ferrari at 4-5 billion euros ($5.17 billion to $6.47 billion)

Montezemolo was a protégé of Fiat patriarch Gianni Agnelli and became Ferrari's sporting director at the age of 26, helping its driver Niki Lauda to two of his three world titles.

However, Ferrari have not won a drivers' or constructors' title since 2008 and Marchionne said on Sunday that the team's performance was "unacceptable" in what was widely seen as a public sacking of Montezemolo.

Insiders said there was never any love lost between the two exuberant businessmen, each powerful in his own right. But their differences became more apparent in recent months as Fiat completed its buyout of Chrysler and prepared to move its headquarters away from Italy, the carmaker's home for the past 115 years.

Though he was reappointed Ferrari chairman in March, Montezemolo did not travel to Detroit in May when Fiat presented an ambitious business plan for the next five years. He was also excluded from the board of the new FCA.

Montezemolo, however, leaves with much of the credit for having rebuilt the Formula One team after Enzo Ferrari's death in 1988, his hiring of Jean Todt as principal leading to the arrival of Michael Schumacher and a string of successive constructors' and drivers' titles between 1999 and 2004. Schumacher's 2000 success ended a 21-year-wait for a Ferrari champion.

Ferrari, which sells about 7,000 cars a year, made a record 2.34 billion euros in revenue last year with an operating profit margin of 15.6 percent.

Fiat owns 90 percent of Ferrari, with the remaining 10 percent held by Piero Ferrari, the group's vice chairman and son of the carmaker's founder Enzo Ferrari.

© 2017 Thomson/Reuters. All rights reserved.

 
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Ferrari chairman Luca Cordero di Montezemolo is quitting the Italian sports car maker to be replaced by the boss of parent group Fiat, Sergio Marchionne, after the two auto industry heavyweights clashed over strategy and the Formula One team's poor results.
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