Fiat Begins Search for New CEO

Fiat was scrambling to keep its turnaround plan on track on Monday after a tumultuous three days that saw the death of its chairman and the shock resignation of chief executive Giuseppe Morchio after the head of Ferrari, Luca di Montezemolo, was promoted to the company's top post.

The chain of events was set in motion by the death of Umberto Agnelli, the last senior manager from Fiat's founding family and a strong supporter of a plan Morchio drew up to pull Italy's biggest industrial group out of a deep crisis.

Fiat said it would pick a new CEO on Tuesday, its fifth in two years.

Media speculated that Fiat could pick a new leader from within - either Paolo Monferino, head of Fiat's tractor and bulldozer arm CNH Global or former Ford Europe CEO Martin Leach, who just arrived at Fiat's luxury Maserati brand.

Other names doing the rounds on Monday included the CEO of road operator Autostrade Vito Gamberale, the head of UniCredito bank Alessandro Profumo and former Fiat CEO and current Mediobanca chief Gabriele Galateri.

The shock reshuffle of Fiat's top management puts an end to the era of stability that Agnelli and Morchio brought when they arrived in February 2003.

The pair quickly put together a recovery plan, firmly focusing on Fiat's core auto business and putting an end to months of revolving-door management as one head after another rolled for letting the 105-year-old giant tumble deep into loss.

All that changed on Sunday when di Montezemolo, the flamboyant head of Ferrari and a close friend of the Agnelli family, was named as Umberto's successor as chairman.

"My decision (to resign) was based on the change in conditions caused by the choices made by the board today," Morchio said in a statement late on Sunday. Media said Morchio wanted the chairman's seat for himself.

"I regret I am no longer able to be part of the group's recovery plan which I put together, which I have always believed will pull the group out of crisis and which is showing its first results," Morchio said.

Morchio Respected

Investors had welcomed Morchio as the first outsider to be given free rein at a company traditionally run by the Agnellis and their long-time employees, almost all of them Italian.

He brought in a raft of other new managers, putting the core car unit in the hands of an Austrian, Herbert Demel, and handing its Iveco truck unit to Jose Maria Alapont, a Spaniard.

The team was working well together and the 11-month-old plan was already bearing fruit as Morchio sold non-core assets and shared more costs across Fiat's various units and with partner General Motors , which owns 10 percent of Fiat Auto.

Morchio's replacement will have to get down to business fast as a deadline looms for Fiat to settle a spat with GM over whether the U.S. giant could have to buy the rest of Fiat Auto and as talks with banks owed three billion euros bubble away.

Di Montezemolo worked under Morchio as the head of Fiat's luxury Ferrari-Maserati unit but sources in Turin said the two men's characters were "too big to share the same stage."

The Ferrari president, who recently took over as head of Italy's influential employers body, is due to address industrialists in northern Italy later today. The bankers he will now have to negotiate with are meeting in Rome at a little earlier.

Some Fiat watchers had wondered if the Agnellis, once seen as Italy's uncrowned royal family, would lose their tie with Fiat after Umberto's death - 15 months after his brother, Fiat patriarch Gianni Agnelli, died.

But instead the Agnellis, who control Fiat with a 30 percent stake, named two more members of the family to the board including Umberto's son Andrea and promoted Gianni's 27-year-old grandson and heir John Elkann to the post of vice-president.

"The Agnellis are not finished...We have never thought of abdicating our role and our responsibilities," one of Umberto's four sisters, Maria Sole, told la Repubblica on Monday.