7 Min Read
MARANELLO Italy (Reuters) - Luca Cordero di Montezemolo, chairman of Italian luxury sports car maker Ferrari, is quitting to be replaced by the boss of parent group Fiat FIA.MI after the two men clashed over strategy and the Formula One team's poor results.
Montezemolo, one of Italy's best-known and most colorful businessmen and a protégé of Fiat's founding Agnelli family, will leave on Oct. 13. That day, the newly merged Fiat Chrysler Automobiles (FCA) is due to be listed in New York.
Fiat Chief Executive Sergio Marchionne hopes the allure of Ferrari, one of the world's strongest luxury brands, will help drive U.S. investor interest in the new automaker. Longer term, however, the question is whether the 62-year-old Italian-Canadian, whose pedigree is in the mass-market world of Fiat and Chrysler, can maintain the cachet of the Ferrari brand.
Ferrari has so far kept a tight lid on volumes, limiting production to 7,000 cars per year as a way to preserve the exclusivity of its cars. But Marchionne said during a news conference on Wednesday this number could be raised gradually.
Under Montezemolo, whose penchant for exquisitely tailored suits is a stark contrast to Marchionne's casual, no-tie college student look, Ferrari raced to the top of the Formula One grid.
The glow of Ferrari's victories on the racetrack increased revenues tenfold and tripled sales volumes, helping the Italian family business whose blood-red cars were snapped up by the super-rich become one of the world's most powerful brands.
But Montezemolo's relationship with Marchionne had soured in recent years, because of disagreements over the role of the luxury sports car business within the Fiat group, people with knowledge of the situation said.
Chairman since 1991, Montezemolo has wanted to keep Ferrari autonomous, while Marchionne has pushed to better integrate the business within Fiat to boost the group's move into the premium end of the car market as it seeks to rival the likes of Volkswagen (VOWG_p.DE) and BMW (BMWG.DE).
Marchionne said on Wednesday that he and Montezemolo, who has been tipped to become chairman of airline Alitalia, had discussed the future of Ferrari at length.
"Our mutual desire to see Ferrari achieve its true potential on the (Formula One racing) track has led to misunderstandings, which became clearly visible over the last weekend," he said, referring to the lack of a Ferrari driver in the top three at an Italian Grand Prix for the first time since 2008.
For Montezemolo, meanwhile, the Chrysler marriage clearly played its part.
"Today I am leaving serene and proud. There is no doubt that a new phase begins for both Ferrari and the whole group," Montezemolo said during a joint news conference with Marchionne on Wednesday at Ferrari's headquarters in Maranello.
The two men sounded conciliatory tones before reporters. But Montezemolo quipped: “Marchionne has been arguing with me since 2002."
Marchionne, who has been running Fiat since 2004 and revived its fortunes through the tie-up with Chrysler, now wants to flash the Ferrari card to attract U.S. investors when the group makes its debut on Wall Street.
Fiat shares rose 2.6 percent to 7.89 euros by 0641 EDT on Wednesday, with the market speculating that Montezemolo's exit could open the door for a spin-off and listing of Ferrari, a move Marchionne has repeatedly ruled out. Analysts value Ferrari at 4-5 billion euros ($5.17 billion to $6.47 billion).
At the news conference, Marchionne said there were no plans for a Ferrari IPO nor to fold Ferrari into the Fiat group. He also said that winning on the Formula One track was “an essential part” of the Ferrari brand and a “non-negotiable target” for the group.
Montezemolo, who has often toyed with the idea of entering politics, was a protégé of Fiat patriarch Gianni Agnelli and became Ferrari's sporting director at the age of 26, helping its driver Niki Lauda to two of his three world titles and helped make Ferrari's symbol - the prancing horse - one of the world's most recognizable status symbols.
However, Ferrari has not won a drivers' or constructors' title since 2008, and Marchionne said on Sunday that the team's performance was "unacceptable". That was widely seen as a public sacking of Montezemolo.
Insiders said there was never any love lost between the two exuberant businessmen, each ambitious and powerful.
But their differences became more apparent in recent months as Fiat completed its buyout of Chrysler and prepared to move its headquarters away from Italy, the carmaker's home for the past 115 years. In recent months, their showdown became a battle of wills and of egos.
It was one of the few lost battles for Montezemolo, whose mane of hair and aquiline nose make him instantly recognizable in a crowd of often bland businessmen.
Montezemolo organized the 1990 World Cup in Italy, was himself chairman of Fiat, managed Italy's America's Cup challenge team, headed the powerful business lobby Confindustria and created a start-up that ended the state railway system's monopoly on high-speed train service.
Though he was reappointed Ferrari chairman in March, Montezemolo did not travel to Detroit in May when Fiat presented a business plan for the next five years. He was also excluded from the board of the new FCA.
Montezemolo, however, leaves with much of the credit for having rebuilt the Formula One team after Enzo Ferrari’s death in 1988, his hiring of Jean Todt as principal leading to the arrival of Michael Schumacher and a string of successive constructors’ and drivers’ titles between 1999 and 2004. Schumacher’s 2000 success ended a 21-year-wait for a Ferrari champion.
Ferrari, which sells about 7,000 cars a year, made a record 2.34 billion euros in revenue last year with an operating profit margin of 15.6 percent.
Fiat owns 90 percent of Ferrari, with the remaining 10 percent held by Piero Ferrari, the group's vice chairman and son of the carmaker's founder Enzo Ferrari.
Montezemolo once called himself "an apostle of risk," a characteristic that is definitely not engrained in the psyche of a country where many people still would rather seek a low-paying but secure civil service "job for life" than take a chance in the marketplace.
He founded a think-tank called Italiafutura that promotes competition in the marketplace and political debate.
(1 US dollar = 0.7735 euro)
Additional reporting by Alan Baldwin and Stephen Jewkes; Editing by Silvia Aloisi and David Goodman/Janet McBride