JUNE 2, 2004
What Montezemolo at Fiat means to Ferrari
Ferrari boss Luca di Montezemolo has become chairman of the entire Fiat group, replacing the late Umberto Agnelli. Montezemolo has spent most of his working career within the vast Fiat empire and his success at Ferrari over the last 12 years has made him the star of the new generation of Fiat managers. Now he is the boss and has the job of sorting out a company which in 2002 made a loss of $5.2bn and sank further into debt in 2003 with losses of another $2.3bn. The firm is expected to go on making losses until 2006 when the consolidation will begin to produce results. Montzemolo will no doubt want to speed up that process. Fiat's strength is in its ownership of great brands not only in the automobile world but also in the world of trucks, tractors, construction vehicles, buses, military vehicles and aircraft. There are an array of component companies, but also businesses which built advanced robot machines for mass production. There is construction, information technology, financial services, leisure, sport and publishing. Umberto Agnelli believed that the firm must go back to its roots in order to survive and began to consolidate operations, selling off profitable subsidiaries to focus the group on car-making.
One of Montezemolo's strengths is his understanding of brand marketing and this will be key in the revival of the Fiat car company. Fiat owns powerful automotive brands such as Alfa Romeo and Lancia, in addition to the stellar Ferrari-Maserati firm. There is much potential for increasing sales of both Alfa and Lancia if they are correctly positioned in the market and if they have exciting new products. Montezemolo completely rebuilt Maserati and will no doubt aim to do the same with Alfa Romeo and Lancia. Changing the image of mass production brand Fiat will be a more difficult task but with the success of brands such as Mini and Smart it is not an impossible task for Fiat to completely change the way that it is seen by the world and become as profitable as BMW or a similar firm.
Montezemolo, more than anyone, understands the value of Formula 1 and we would not be surprised to see Fiat giving even more backing to the F1 team to secure its long term position in the sport and offsetting the loss of tobacco advertising. We would also expect to see more of an effort made in other areas of the sport with the other Fiat brands with a bigger push for Alfa Romeo in touring car competition and for Lancia in rallying. That will probably take time as the key thing will be to create new models, more efficient production and sales networks in order to maximise profits when they begin to come.
It is quite possible too that Montezemolo will use other profitable Fiat brands to sponsor the racing activities.
One way or another, Montezemolo's move to the top of Fiat is good for motorsport. Now we must wait and see how.
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