Death of Successor Puts Pressure on Fiat

Fiat SpA, Italy’s largest company, is likely to move quickly to fill the gap left by Giovanni Alberto Agnelli, 33, who had been favored to take over as chairman next year but died of stomach cancer Saturday.

“Certainly Agnelli’s death throws open the whole question of succession,” said a Milan analyst.

Fiat’s current chairman, Cesare Romiti, must resign when he reaches the company retirement age of 75 next year.

Agnelli’s death is a major story in Italy, where he was the unwilling prince charming of the dynasty that many Italians speak of as their Kennedys.

“The shattered fairy tale,” ran a headline in Milan’s Corriere Della Sera newspaper, reflecting the tragedy of a man who left behind a young wife and a 3-month-old daughter.

Though Agnelli’s illness was diagnosed earlier this year, Fiat and its controlling family have been reluctant to publicly discuss the thorny question of management succession.

The Italian media have followed suit, indulging in little or no speculation about the family’s future management role at Fiat, the auto maker and industrial giant that accounts for about 3% of Italy’s gross domestic product.

If Agnelli had lived to take over, it would have put the family name back in the top post again in time for Fiat’s centenary in 1999.

The company was founded by Agnelli’s great-great-grandfather, also named Giovanni.

Despite being born into Italy’s richest and most famous family, Agnelli liked to call himself a pragmatist with dreams.

At 18, he worked on an assembly line in one of the Agnelli factories in industrial Turin to see how life was for workers. That experience helped build an attitude. “I am convinced that industry’s role is to improve society. Maybe this is more important than simply churning out profits,” he said later.

Agnelli joined Piaggio Veicoli Europei motorcycle company, which had been in his mother’s family, in 1987 and within seven years was chairman and chief executive of the company, turning it into the leader in the European scooter sector and the fourth worldwide behind Japanese giants Honda Motor Co., Suzuki Motor Corp. and Yamaha Motor Co.

With Agnelli’s death, Romiti’s successor at Fiat is unlikely to be another Agnelli family member, said analysts, because there is no candidate with the training or inclination to take the helm.

Former Fiat Chairman Gianni Agnelli--uncle of Giovanni Alberto Agnelli--said this summer that he had a candidate in mind to replace Romiti but declined to say who it was. Analysts don’t expect the succession issue to weigh on the company’s stock.

Fiat’s succession problem is a common one at family-owned Italian companies. But the country suffers from a dearth of well-trained, young, up-and-coming managers in general.

Top spots at Telecom Italia and the newly privatized Italian market also need to be filled.

Romiti told a group of 500 Fiat managers in Turin last Tuesday that the company’s management team was “firmly in place,” indicating that one of the top executives could be temporarily tapped as chairman, or Romiti could be asked to stay on for another year as a special exception.

Gianni Agnelli’s brother, Umberto, has been mentioned as a possible Romiti replacement. But Umberto Agnelli is busy elsewhere, having embarked this year on a strategy of the Agnelli family’s holding companies, IFI and IFIL, into banking and telecommunications.

Fiat’s core business is automobiles and industrial vehicles. But the scope of its activities has extended Fiat’s influence--along with that of the Agnelli family--into every corner of the Italian economy, earning it the reputation of being a state within a state. Besides cars, its businesses include agricultural machinery, civil engineering, aviation and, chemicals.