Giovanni Agnelli

Charismatic Italian industrialist with 'extraordinary power'

Giovanni Agnelli, industrialist: born Turin, Italy 12 March 1921; vice-president, Fiat 1943-63, general manager 1963-66, chairman 1966-96, honorary chairman 1996-2003; chairman, Istituto Finanzario Industriale 1959-2003; chairman, Giovanni Agnelli Foudnation 1968-2003; Honorary Fellow, Magdalen College, Oxford 1991; married 1953 Princess Marella Caracciolo di Castagneto (one daughter, and one son deceased); died Turin 24 January 2003.

To Italians, Giovanni Agnelli was their "uncrowned king" and occupied a position as close to God as the Pope. Throughout the rest of the Western world, he was regarded more as a head of state than an industrialist. His standing in his own country is best described by an old joke: the Pope is celebrating Mass in St Peter's Square, when a little boy asks his father who the man is with the skull cap standing next to Mr Agnelli.

"Gianni" Agnelli, so called to distinguish him from his grandfather, Giovanni Agnelli, who founded Fiat in 1899, was also referred to as "l'avvocato", "the lawyer", since he had studied Law, even though he never practiced at the bar.

Gianni Agnelli's unique prestige was the result of several factors. Italian capitalism has always been dominated by a handful of northern families, the so-called Salotto buono and, among them, the Agnelli family has always been considered primus inter pares. There was Agnelli's own charisma, due in large part to his patrician charm and playboy reputation. In a country where most public figures do little more than talk, there was a perception of Agnelli as a man of action. Then there was the special role of Fiat in a country where the car has enormous importance. Further, Agnelli was a man whose honest reputation remained untouched, even by the "Clean Hands" scandal, something that could not be said of most other Italian businessmen and politicians.

Undoubtedly, Agnelli's status and power had a great deal to do with his chairmanship of Fiat, Italy's biggest and most successful multi-national corporation, of which the Agnelli family is the major shareholder. The family exercises control of Fiat through two holding companies, IFI and Ifil, in alliance with a number of other key shareholders, most notably the Italian merchant bank Mediobanca and Deutsche Bank.

Even though Fiat means much more than cars, the Fiat Auto division still makes up 42 per cent of its revenues. The group's other activities include the manufacture of tractors, component parts for cars, industrial vehicles, buses and railway systems, aeroplane engines, flashy sports cars such as Ferrari and Maserati, newspapers and publishing, insurance companies, food companies, engineering and construction. Thus Agnelli was able to influence virtually every aspect of Italian business. Fiat also controls two of Italy's three most important newspapers, La Stampa and the Corriere della Sera, giving Agnelli what in Italy was referred to as strapotere or "extraordinary power".

It was perfectly normal for journalists to ask Agnelli for a comment on the government's economic or foreign policy, the performance of a particular politician or football player, the latest fashion in clothes, or indeed virtually anything that might be in the news. So, it is hardly surprising that, for years, to paraphrase an old statement about General Motors, Agnelli had little difficulty in convincing most Italians that "what was good for Fiat was good for Italy".

The political authorities were easily convinced to assist Fiat and – at the taxpayers' expense – provided the infrastructure for the development of a large car market, most notably by approving the construction of a network of motorways and by running down public transport. Between 1951 and 1971, the population of Turin literally doubled and Fiat was quick to take advantage of the pool of cheap labour that became available, leaving it to the state to help with housing and other problems.

Agnelli's tanned, deeply lined face – he didn't believe in face-lifts – was instantly recognisable to Italians. His white button-down shirt with its collar points undone, his wristwatch strapped outside the cuff, was part of a look imitated by scores of Agnelli admirers. It is not an exaggeration to say that, to Italians, Agnelli represented the ideal of the bella figura and was the perfect incarnation of the image that they would like to impress upon the rest of the world: successful, rich, intelligent and sexy.

Possibly as a result of a strict upbringing by his English nanny, Miss Parker, Agnelli was famous for withstanding pressure and enduring physical and moral pain. "I don't like people who display their feelings, who scream and squeak and make a great case," Agnelli explained. "It doesn't look nice. It is a matter of the way one disciplines oneself, how one builds oneself."

Some Italians considered Agnelli the very personification of capitalism and all its evils and, during the late Sixties and early Seventies, many left-wing Italians regarded Agnelli with a sort of love-hate relationship. Even during the years of the worst industrial strife, it was not uncommon for factory workers in Turin, who voted for the Communist Party and went on strike against Fiat during the week, to join Agnelli in the stadium on Sunday to cheer on FC Juventus, the Agnelli family's own soccer team.

The Fiat 500 transformed Italy into a nation of car owners. The Cinquecento became a symbol of the so-called "economic miracle" of the Sixties. At that time, for most Italians, the ultimate dream was represented by a television antenna on the roof and a Fiat 500 outside the door.

For decades, Agnelli was a notorious playboy with glamorous and influential friends and it was no secret that his sentimental escapades continued even after his marriage in 1953 to Princess Marella Caracciolo di Castagneto. As he explained it, "I really loved everything beautiful in life. And a beautiful woman is the most beautiful thing of all."

As a father, Agnelli's shortcomings were even more evident and both his children suffered from his indifference. He was greatly disappointed by his son, Edoardo, who was frail and sensitive, and made an effort to get closer to him only after Edoardo was arrested for heroin possession in 1990. In 2000, Edoardo committed suicide, jumping from a bridge on the Torino-Savona motorway.

Gianni's own father, Edoardo, son of Giovanni Agnelli, died in an air crash in Genoa in 1935, when Gianni was only 14. During the Second World War, he served in a cavalry regiment, first on the Russian front where he was wounded twice and, later, in North Africa. After Italy's surrender in 1943, Agnelli joined the Allies to fight against the Germans.

The role of wise elder statesman represents a second and distinct phase of his career. As a young man, when Fiat was run by Vittorio Valletta, Agnelli enjoyed the good life. After the war, he took a degree in Law at Turin University and, he recalled: "I came out of the war and wanted to enjoy life. I worked very little in those days, but I knew what was going on in my business."

The turning point came in the early Fifties. In 1952 he was involved in a serious car accident after a wild night out on the French Riviera. That year, he became the vice-chairman at Fiat (succeeding to the chairmanship only after Valletta retired in 1966). It was the year that construction work began on the Togliatti factory in the Soviet Union.

In the early 1970s, a new group structure was formed at Fiat. This involved making each division profit-oriented, with the holding company one step removed. The process was begun in 1974 and completed in 1979 with the creation of the Fiat Auto cars division. In 1976, Fiat shocked the West by attracting Libyan investments, which helped finance the renewal of the passenger car range.

Overall, the 1970s contained a succession of unmitigated disasters. The combined effects of the energy crisis, shrinking markets and mounting losses, terrorism and a struggle with the unions led many experts to worry that the company might not survive. Then, in the early 1980s, Fiat staged a remarkable comeback, becoming the star performer of Italy's much talked-about second economic miracle.

But in 1993, Fiat, caught up in Europe's worst post-war recession, was back in a slump. The company's market share had been shrinking steadily since 1988, both in Italy and in Europe. When some key shareholders agreed to provide Fiat with a badly needed injection of new capital only if Agnelli, 72 at the time, agreed to stay on as chairman, he was forced to postpone his retirement.

By 1994, sales had picked up and in 1997, the Fiat Group registered record profits. But at the beginning of last year, it was clear that, once again, Fiat was in serious trouble. Right to the end, Agnelli strongly opposed the sale of Fiat Auto but now it is possible that the family may have a change in heart, especially if one considers that, without Fiat Auto, last year the Fiat group would have earned a $500m net profit instead of losing $704m. Gianni Agnelli died only hours before he was due to chair a gathering of the Agnelli family to discuss the future of Fiat.

According to Business Week, "The demise of Fiat Auto as an independent carmaker would also rock Italy Inc, revealing the painful truth not only about Fiat's mismanagement but also about decades of flawed industrial policy." Fiat's problems are largely due to the fact that the company has been unable to produce a new generation of cars that can meet the demands of the highly competitive European market. Experts point out that, in recent years, Fiat invested three times less than Volkswagen in research and the development of new models. So, it's no surprise, they say, that most people are convinced that Fiat makes shoddy, boring, cars. Once fiercely loyal to their unreliable Fiats – the old joke was that Fiat stood for "Fix it again Tony" – in recent years the Italians have started to demand quality.

Mainly as a result of Fiat's rollercoaster performance, Agnelli's business skills were the subject of greatly contrasting opinions. Some critics believe that Agnelli might have made his best decision in the late Seventies when he decided that he and his younger brother, Umberto, should leave the day-to-day running of Fiat to shrewd professionals like Cesare Romiti and Vittorio Ghidella.

When the "Clean Hands" investigation that erupted in 1992 swept away most of Italy's notoriously corrupt ruling class, although Agnelli himself was spared by the magistrates, senior Fiat executives were charged with misconduct. Agnelli tried to downplay his company's responsibilities. Some believe that Agnelli's failure to speak out and denounce the system's endemic corruption was his greatest moral failure. In his own defence, Agnelli insisted that it would have been impossible to challenge the coalition parties that ran the country because to do so would have enabled Italy's Communist Party to take over and this, before the collapse of Communism and of the Soviet Union in 1989, was unthinkable.

Agnelli was a generous patron of the arts and letters. For years he underwrote Italian studies at Oxford University and, thanks to him, Fiat restored the Palazzo Grassi in Venice and turned it into one of Italy's most prestigious exhibition centres.

He was a strong believer in European unity. In 1991, delivering the annual Romanes Lecture at Oxford, he stated his vision of Europe's role. National ambitions, Agnelli asserted, were things of the past; Europe was now "free of both the responsibility and the conceit involved in being the political and cultural centre of the world". Its tasks – as mediator between the superpower of America, an Eastern Europe emerging from a discredited Communist past and the Islamic and African worlds to the South – could only be carried out in unity.

In 1996, after 30 years as chairman of Fiat, Agnelli finally stepped down and handed over the reins to Romiti. And even as the changing of the guard seemed to signal the end of an era, the move was clearly intended to be only temporary. It was no secret that the Agnelli family was determined to regain full control in little more than a year, when Romiti himself was expected to retire.

Umberto's son, Giovanni, known as "Giovannino", was already being carefully groomed to take over but, in December 1997, when he died unexpectedly from stomach cancer, the Agnelli family swiftly appointed John Elkann, the eldest son of Gianni's daughter Margherita, to the board of Fiat.

In 1998, Agnelli welcomed Italy's admission into the elite club of Europe's imminent monetary union. "I was personally in favour of a single currency and always believed that it would happen, even in the darkest days," he said. Agnelli acknowledged that the time had come for Italy to reform its old-fashioned way of doing things. Almost as if to underline his words, in June 1998 Romiti was replaced as chairman by Paolo Fresco, formerly vice-chairman at General Electric, where he had been considered the company's international strategist. Agnelli clearly understood that the days of the Italian business world that he had for so long represented were over.

It appears that Fresco's efforts may have been a case of "too little, too late," however. After 103 years, it is unclear what the future has in store for Italy's once proud car manufacturer. For half a century, Fiat enjoyed a near monopoly on Italy's automobile market and discreetly influenced the politicians who built the highways and approved the tax incentives that helped ensure that the Italians would continue buying the cars. But in recent years, the company that had played a key role in transforming Italy into the world's fifth largest economy was able to survive only thanks to generous government subsidies paid by Italian taxpayers.

Gianni Agnelli's death may well mark the end of an era, in more ways than one.

Wolfgang Achtner