Press Release from Fiat Auto (UK) Limited  

Sergio Marchionne to assume role of CEO, Fiat Auto

Sergio Marchionne, Fiat Group CEO, is assuming the role of CEO, Fiat Auto, replacing Herbert Demel who is leaving the company.

"Today's decision to take direct responsibility of Fiat Auto," said Sergio Marchionne, "is aimed at concentrating Fiat Group's efforts on the recovery and re-launch of Fiat Auto.

"The agreement reached with General Motors saw Fiat's rights confirmed and represents a fundamental step in Fiat Auto's future.

"It is now possible to operate in total autonomy, without constraints but also without alibis. We must dedicate ourselves completely to the fundamentals of an automobile manufacturer: products, sales network and customer services.

"In Fiat Auto and Fiat SpA," continued Mr. Marchionne, "a profound cultural transformation is underway following a management reorganisation that has delivered a more agile and efficient structure. A structure based on accountability and speed of decision-making processes. This is bringing and will continue to bring greater cost-reduction and operational benefits, contributing to a recovery in the competitivity of our assets.

"Of all Fiat Group sectors, Fiat Auto must be the principal focus of our attention. Other sectors are working well and intensively in order to achieve the objectives we have set for ourselves. The first results are already tangible. In fact, all sectors closed 2004 with better than expected results. Group break-even for 2004 is achievable.

"I wish to thank Herbert Demel for the work he has carried out with ability and dedication. I wish him well for the future."

From Automotive News:

By Luca Ciferri
Automotive News / February 18, 2005

TURIN, Italy -- Maserati CEO Martin Leach is expected to leave Fiat group early next week, according to industry sources. He would be the third Fiat group top executive ousted by CEO Sergio Marchionne in three weeks.

· On Feb. 2, Marchionne ousted IVECO heavy truck maker CEO Jose Maria Alapont, replacing him with Paolo Monferino, CEO of farm equipment maker CNH. Marchionne is now looking for an outsider to run CNH.

· On Feb. 17, Marchionne fired Fiat Auto CEO Herbert Demel. Marchionne added the Fiat Auto CEO role to his duties as CEO of the Fiat group.

Leach could soon end a short and much troubled relation with the Fiat group.

In August 2003, then Fiat group CEO Giuseppe Morchio hired Leach to replace Giancarlo Boschetti at the head of Fiat Auto.

Leach had been fired as Ford of Europe president and COO on Aug. 12, 2003.

But Morchio wanted Leach freed by a 2-year Ford non-compete clause by Sept. 1.

Ford didn't free Leach and so Morchio opted for former Bosch, Audi and VW executive Herbert Demel for the Fiat Auto post.

But Morchio didn't stop trying to get Leach to Italy.

In January 2004, a Detroit court ruled out Leach was fired by Ford and so the non-compete clause was unenforceable. Leach is seeking at least $40.4 million from the automaker, claiming that Ford prevented him from taking the CEO job at Fiat Auto.

In spring 2004, Morchio decided to hire Leach as CEO of both Ferrari and Maserati, but Ferrari chairman and CEO Luca Cordero di Montezemolo opposed the move.

The power struggle was won by Montezemolo, who kept the Ferrari CEO post, also naming his racing team boss, Jean Todt, the new company COO.

Morchio appointed Leach to head Maserati, but two days before Leach took over in Modena, on June 1, 2004, Morchio had left the Fiat Group.

Leach prepared a new business plan for Maserati, which has been losing money since it entered the Fiat group in 1990.

Early this year, Montezemolo and Marchionne decided Maserati could not return to profitability as a junior brand to Ferrari, because it needs much higher volumes and a stronger industrial integration with Alfa Romeo.
On Feb. 16, Fiat group announced it will spin-off Maserati from Ferrari.

Marchionne said collaboration between Maserati and Alfa Romeo will help Alfa "re-establish itself as a leading contender in its segment and expand its presence in international markets."

Maserati is expected to base two new models on Alfa's Premium platform: an entry-level spider and a 5-door crossover based on the Kubang GT wagon concept.