Agnelli family's grip on the Fiat steering wheel loosens with the death of Umberto

Cairman who began to turn around the car maker's fortunes dies from cancer at 69
Click to follow

Italy's most absorbing family saga, its Dallas and Dynasty rolled into one, took another tragic turn around midnight on Thursday when Umberto Agnelli, the chairman of the Fiat car group, died in his bed aged 69.

Italy's most absorbing family saga, its Dallas and Dynasty rolled into one, took another tragic turn around midnight on Thursday when Umberto Agnelli, the chairman of the Fiat car group, died in his bed aged 69.

His death from cancer, less than 18 months after his more charismatic brother Gianni was struck down by the same disease, opens up the prospect that an Agnelli will not have his hand on the steering wheel for the first time in Fiat's long history. "For the first time in over a century there is no longer a central reference point," said Italy's deputy finance minister, Mario Baldassarri.

Thirteen years younger than his dashing brother Gianni, who for decades was the living symbol of Italy's biggest corporation and often described as the country's uncrowned king, Umberto was the runt of the family, the youngest of seven brothers and sisters, and overshadowed constantly by his sibling. But Gianni's death on 24 January 2003 threw him into the limelight and Fiat into the biggest crisis in its history.

The conglomerate was still huge, employing 170,000 people around the world and 85,000 in Italy, accounting for more than 5 per cent of Italy's GDP.

But as Gianni waned, the empire with which he was identified waned with him. By his death it was losing some 10,000 billion lire per year. Long a symbol of the Italian industrial and design genius, Fiat had become instead a case-study for the limitations of family-based Italian firms.

Umberto, to general astonishment, changed all that. He had been anointed by Gianni as the next chairman some months before the old man's death, but despite the fact that he had been running outposts of the conglomerate since taking control of Juventus football club aged 22, he was a dark horse.

He had spent much of his career a long way from motor cars - running a family insurance business in France, for example. Named by Gianni to run Fiat Auto back in the 1987, he had been rejected by Mediobanca, the all-powerful Milanese finance house. He was on the record as saying that Fiat's days manufacturing cars were numbered.

Was Umberto to oversee the dismemberment of the empire, the end of Fiat as a car maker?

He surprised practically everybody by doing the precise opposite. He promised the family: "We shall get out of this crisis with our heads held high.... To hold fast and go ahead is the best way to honour my brother's memory."

Disdaining the famous names thrown up by the rumour mill, he hired Giuseppe Morchio as chairman, a man with practically no public profile in Italy but long experience working for the tyre giant Pirelli in the US and elsewhere in Europe.

Morchio set about divesting Fiat Group of its non-core businesses, including insurance companies, banks and aerospace, ploughing the proceeds back into the car company. Umberto also persuaded Agnelli family members to put their hands in their pockets - something that had not happened in a long time.

The two men put a stop to debilitating rumours that the group was preparing to exercise its "put" on General Motors, which has a ten per cent stake in Fiat Auto. Instead, the group began rolling out smart new models - a new Punto, a new Uno, a new Lancia Ypsilon, with more waiting in the wings - which have reminded the world that small, neat cars were always, from the days of the post-war Toppolino, what Fiat did best.

The Umberto/Morchio strategy appears to be working: both Fiat Group and its auto division are set to break even, the former this year and the latter in 2005, and to move into profit thereafter. A bitter strike earlier in the spring at Melfi, one of the firm's plants in southern Italy, was a blot on an otherwise improving picture.

But Umberto's sudden death - he had been told his cancer was curable, and believed he had several more years of active life ahead of him - has thrown the troubled dynasty into turmoil once more.

It has been a roller coaster of a century since the Fabbrica Italiana Automobili Torino bolted together its first car in 1899 - four years before Ford - the fruit of a collaboration between Giovanni Agnelli, a cavalry officer, and a Torinese count.

The First World War saw the firm rise to prosperity but it was after the Second World War that its heyday began, when Fiat became synonymous with Italy's boom years and enjoyed such sway over successive weak governments that it effectively dictated Italian transport policy, ensuring that public transport was stunted and a web of autostrade rapidly enveloped the nation, giving the new Fiat-owning middle class places to drive.

In Gianni Agnelli, the grandson of the founder, Fiat had a figurehead worthy of its stature: the imperious playboy who married a princess with what seemed to be the longest neck in Europe, and who with his looks, his style, his yachts and his fancy foreign friends (Jackie Kennedy, Henry Kissinger) became the embodiment of Italy's dreams.

But getting beyond Gianni was always Fiat's problem. Umberto's son Giovanni - the product of his first marriage to Antonella Piaggio, of the scooter dynasty, who had been groomed for the top - died of cancer in 1997 aged 33. Gianni's son Edoardo committed suicide aged 46 in 2000 by throwing himself from a viaduct, though he had taken little interest in the family firm. With Umberto's death the Fiat board has no member on it with the name Agnelli for the first time since 1899.

Gianni's grandson, John Elkann, one of two by his daughter Margherita, sits on the board and also helps run the affairs of the Agnelli family's private holding company, IFI. John, by common consent, is the heir apparent and future chairman of Fiat but at 28 he is probably took young and inexperienced to step into Umberto's shoes just yet.

Gianni's other grandson, Lapo Elkann, is also committed to Fiat and works as a marketing director for Fiat Auto.

To Umberto, Gianni was in many ways a father figure (his own father died when he was only one), and he lived practically his whole life in his older brother's shadow. With Gianni's death he proved that as a businessman he was at least a match for his brother. It is therefore both his tragedy, and Fiat's, that he should die before seeing his work come to fruition.