 Sales of Fiat models including Alfa Romeo are set to fall this year |
The chief executive of the Fiat conglomerate has taken day-to-day control of its struggling car business in an effort to turn it around. Sergio Marchionne has replaced Herbert Demel as chief executive of Fiat Auto, with Mr Demel leaving the company.
Mr Marchionne becomes the fourth head of the business - which is expected to make an 800m euros ($1bn) loss in 2004 - in as many years.
Fiat underperformed the market in Europe last year, seeing flat sales.
Radical changes
The car business has made an operating loss in five of the last six years and was forced to push back its break-even target from 2005 to 2006.
The management changes are part of a wider shake-up of the business following Fiat's resolution of its dispute with General Motors. As part of a major restructuring, Fiat is to integrate the Maserati car company - currently owned by Ferrari - within the group's own operations.
Ferrari, in which Fiat owns a majority stake, could be separately floated on the stock market later this year or in 2006 or 2007.
As a result of the restructuring, there has been speculation within the industry about the position of Martin Leach, Maserati's chief executive.
Mr Leach joined Maserati last April after leaving Ford, where he was in charge of its European operations.
He was originally offered the top job at Fiat Auto but was prevented from taking it up after Ford tried to enforce a clause in his contract stopping him from working for a rival.
He later joined Ferrari-Maserati after a court found against Ford.
Main focus
Mr Marchionne, who joined the company last year, after Mr leach, said Fiat Auto was now the "principal focus" of his attention.
"I have made the decision to take on the post of chief executive of the auto unit to speed up the company's recovery," he said.
"A profound cultural transformation is underway following a management reorganisation that has delivered a more agile and efficient structure," he added.
 |  Any respite will be short-lived unless management is able to breathe new life into Fiat's ailing auto business |
Mr Marchionne has been playing a growing role in the car group's activities in recent times.
Last year, he said that a series of new models, launched as part of the group's recovery plan, had not boosted revenues as much as hoped.
Huge losses
The car business, known for its Fiat, Lancia and Alfa Romeo marques, is expected to suffer falling sales in 2005, Fiat said this week, as it exits unprofitable areas such as the rental car market.
Mr Demel, a car industry veteran, took the helm in November 2003 after being recruited by former Fiat chief executive Giuseppe Morchio.
Analysts said the management upheaval was destabilising for Fiat.
"Constant interruptions are really bad for ongoing business," said Patrick Juchemich, senior car analyst with Sal. Oppenheim Bank.
Earlier this week, Fiat dissolved an alliance with GM which could have obliged the latter to buy the Italian firm outright.
GM will pay Fiat $2bn as part of the settlement.
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