Fiat hopes to steady ship as it names new MD

Fiat appointed a new managing director yesterday to replace Giuseppe Morchio, whose sudden departure on Sunday threw the conglomerate into turmoil and provoked a rapid drop in its share price.

Fiat appointed a new managing director yesterday to replace Giuseppe Morchio, whose sudden departure on Sunday threw the conglomerate into turmoil and provoked a rapid drop in its share price.

The new managing director is Sergio Marchionne, an Italian-Canadian with a reputation as a speedy and ruthless turn-around artist, who was appointed to the board of the Italian car maker one year ago after the death of the patriarchal chairman Gianni Agnelli.

Giuseppe Morchio, who was appointed managing director one year ago by Umberto Agnelli, was credited with doing much to restore Fiat to health, selling off assets in unconnected businesses, ploughing the money back into the core vehicle-making business and cutting the company's debt. But Italian newspapers claimed yesterday he was eager for more power in the company, and also for some of the so-called "golden shares" which are the preserve of the Agnelli family. When Luca Cordero di Montezemolo, a family intimate and the successful boss of Ferrari, was appointed chairman at the weekend on the death of Umberto Agnelli, Mr Morchio threw in the towel.

Yesterday John "Jaki" Elkann, the 28-year-old grandson of Gianni Agnelli and the company's new vice-president, said of the rapid decision to elevate Mr Marchionne: "We have tried to be very quick in order to guarantee stability and continuity to Fiat's restructuring plan, which we'll bring forward."

Mr Marchionne said after the meeting at which he was appointed managing director that he promised the firm "commitment and hard work". He added: "Fiat has had problems and still does. Fiat will make it, and will be again what it always has been."

Mr Marchionne has never worked in the motor industry but was strikingly successful as managing director of the Swiss firm SGS, the world's largest goods inspector. Appointed in January 2002, he slashed back staff levels and management layers, doubling the company's income in a year.

These skills and more will be required if he is to make his mark at Fiat, where an improvement in sales and two attractive new models are counter-balanced by continuing losses and a bitter strike at one of its plants. Fiat's losses in the first quarter of 2004 were €194m, down from €681m for the same period last year.