Umberto Agnelli: A conservative choice?

Mr Agnelli's appointment, following the death last month of his older brother, will reclaim the top job at Fiat for its founding family.

Current chairman Paolo Fresco has said he will recommend Umberto to the Fiat board on Friday, when it meets to discuss the deepening crisis at the car maker.

Mr Fresco had been expected to continue as chairman for several more months, but he said he was stepping down early to "smooth" the succession.

Fiat has been plagued by mounting debts, with the car division, which makes the Lancia, Alfa Romeo and Fiat brands, proving to be its biggest liability.

National grief

Mr Fresco, a former vice chairman of General Electric who took over the top job at Fiat in 1998, said: "I am sure that my decision represents a strong message of clarity for those outside and inside the group."

Fiat shares were down as much as 4.5% shortly after the announcement but closed up 0.4% at 7.19 euros.

The death of Gianni Agnelli last month was greeted by an outpouring of national grief.

The Fiat patriarch was chairman of the company for 30 years, building it into a global powerhouse, before retiring in 1996.

Tough measures

Umberto Agnelli, who is 68, heads the Agnelli family holding company IFI and IFIL, which control Fiat with a stake of 30%.

He is regarded as the conservative choice to head the group.

Some investors fear he will be unwilling to take the tough measures thought to be needed to turn its performance around.

Government support

Paolo Banfi, a fund manager with Euroconsult in Milan, said Mr Fresco had "overseen the worst years in Fiat's history.

"But Umberto Agnelli is a conservative choice, he will be supporting the interests of the family, not the banks or the shareholders."

Giulio Brunetta, a fund manager at Alpe Adria Gestioni, said Fresco's US corporate style had alienated him from the Agnellis, who instinctively relied on government support.

"The Italian government has always supported Fiat, the Agnelli family knows that and Fiat's ties with the government should strengthen with Umberto in charge," he said.

Crippling debts

Italian Prime Minister Silvio Berlusconi recently had talks with Umberto on the problems facing the group.

These include crippling debts and the prospect of the group falling into foreign hands.

In 1996, Fiat swapped 20% of Fiat Auto for a 6% stake in the US giant General Motors (GM). It now has the option of forcing GM to buy the rest of Fiat from 2004 onwards.

Mr Berlusconi has said he wants to keep the country's biggest private sector employer in Italian hands.