September 10, 2014 01:00 AM

Marchionne to become Ferrari chairman as Montezemolo quits

Wire reports

Reuters

Marchionne (left) has clashed with Montezemolo (middle) over Ferrari's future. The two executives are pictured with Fiat Chairman John Elkann (right) after the presentation of the LaFerrari hybrid at the 2013 Geneva auto show.

MILAN -- Luca Cordero di Montezemolo will step down as chairman of Ferrari as of Oct. 13 and will be replaced by Fiat Chrysler CEO Sergio Marchionne, Fiat said in a statement today.

The departure of Montezemolo, 67, was widely expected after escalating clashes between the two executives over strategy and the role of Ferrari within the Fiat group.

Ferrari is a key component of Marchionne’s plans to expand in luxury cars to better compete with Volkswagen, which owns Lamborghini among its stable of high-end nameplates.

Montezemolo wanted to maintain Ferrari’s autonomous status and limit sales to about 7,000 cars a year to preserve the brand’s exclusive allure. That clashed with Marchionne’s goal of having Ferrari bolster a shift by Fiat into upscale cars as part of its merger with Chrysler Group.

Marchionne told reporters today that Ferrari will continue to limit annual sales but may gradually raise the cap to cater for rising demand. The cap could undergo "small changes" in some markets to prevent rivals getting an advantage by letting waiting lists get too long, he said. A Ferrari spokesman said the U.S. is one of the markets where demand for Ferrari cars is strong.

Ferrari will continue to provide engineering assistance to Fiat Group's Maserati and Alfa Romeo brands to improve the quality of their cars. "Ferrari is a good school. Its importance within the group should not be underestimated," Marchionne said.

Marchionne said his new role as Ferrari chairman was not temporary and that bringing in a new chief executive for the brand was not on the agenda. He said there is no plan to fold Ferrari into the rest of Fiat Chrysler. "The success of Ferrari is mainly due to its unique brand," he said.

Montezemolo's Oct. 13 resignation date coincides with the day when Fiat plans to list Fiat Chrysler Automobiles (FCA) in New York after completing a merger with its U.S. business and cementing a shift of the Italian group from its home for the past 115 years.

'New phase'

"Ferrari will have an important role to play within the FCA Group in the upcoming flotation on Wall Street. This will open up a new and different phase, which I feel should be spearheaded by the CEO of the Group," Montezemolo said in a separate statement.

Marchionne said that he and Montezemolo had discussed the future of Ferrari at length and that "our mutual desire to see Ferrari achieve its true potential on the [Formula One] track has led to misunderstandings, which became clearly visible over the last weekend."

Marchionne said on Sunday that the recent disappointing performance of Ferrari's F1 team was "unacceptable" and that it was "absolutely non-negotiable" that Ferrari should win F1 races. He also took issue with comments from Montezemolo offering to continue running the brand for three more years, saying that "nobody is indispensable."

Under Montezemolo's tenure, Ferrari raced to the top of the F1 standings, increased revenues tenfold and tripled sales volumes as the Italian family business grew into one of the world's most powerful brands. Despite his frustration with Ferrari's recent F1 results, Marchionne said he had no plans to abandon F1 racing. He said he would give Ferrari the resources it needed to return to being F1 champions.

Chrysler disagreement

Montezemolo is reported to be unhappy at having Ferrari integrated into Fiat Chrysler. "Ferrari is now American,” which represents "the end of an era," Montezemolo told close associates last weekend, Il Corriere della Sera reported Sept. 8.

Italian newspapers including Il Messaggero reported in the last few weeks that he might be tapped to head Italian airline Alitalia. Montezemolo told reporters today that taking on the chairmanship of Alitalia was a possibility but he would decide only after leaving Ferrari in October.

A note to investors from UBS analysts said Montezemolo had become "increasingly marginalized because he had been opposed to the takeover of Chrysler back in 2009 ... the last straw was probably a disagreement with Fiat about future growth," the note said.

Montezemolo served 23 years at the helm of Ferrari, which is 90 percent-owned by Fiat. He was also Fiat Group chairman from 2004 to 2010. Montezemolo wasn’t appointed to the new board of the merged entity, Fiat Chrysler Automobiles.

Montezemolo's departure tightens Marchionne's grip on Fiat Chrysler. "It's even more of a one-man show with Montezemolo leaving," said Giuseppe Berta, a professor at Bocconi University in Milan and the former head of Fiat's archives. "Sergio has the final world on every piece of the cake, and Ferrari is the icing on top."

George Galliers, an analyst at International Strategy & Investment, said: "Taking the helm of Ferrari gives Marchionne much more freedom to evaluate all the different options Fiat has for its super-car unit."

Ferrari IPO

Fiat shares rose 2.6 percent to 7.89 euros by 10:41 GMT today, 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).

Marchionne said there were no plans for a listing Ferrari. "There are no plans...I have been saying this for 10 years," he said today at a joint news conference with Montezemolo.

Gilles Castonguay, Reuters and Bloomberg contributed to this report