Fiat returns to US 100 years later
Anyone less than 30 years old probably never has seen — or at least doesn’t remember seeing — a Fiat automobile in the flesh.
The occasional X1/9 two-seater may still make a public appearance, but you’d have to be lottery-winner lucky to spot it.
Far fewer people will remember that Fiat was building luxury cars in America long before Walter P. Chrysler started the Chrysler Corp. from the remnants of the Maxwell Motor Co. in June 1925. (Watch the history of Fiat.)
Likewise, most people weren’t paying enough attention to the business of the automotive industry in the early 1990s to have known that General Motors owned 20 percent of the Italian company and was flirting with the idea of buying it outright.
So who is this company that suddenly stepped up to provide the Obama administration with a viable automotive entity to help create a new owner partnership to bring Chrysler out of bankruptcy?
A snapshot look reveals that in 2008, Fiat S.p.A. employed more than 190,000 workers and sold approximately 2.15 million vehicles worldwide, according to Automotive News — about a million more vehicles than Chrysler sold for the year. It had a net profit of 1.72 billion euros or about $2.43 billion USD at current exchange rates. The Fiat Group’s business interests go beyond building cars. It has holdings in other industries, as well as in the area of finance. Companies in which it has partial or complete ownership cover a wide spectrum from publishing and insurance to steel production, commercial vehicles and farm machinery.
Its origin was without fanfare as a group of investors gathered at Palazzo Bricherasio in Turin, Italy, on a hot July day in 1899 to sign the charter creating the first Italian car company.
“Fiat” is an acronym for Fabbrica Italiana Automobili Torino (Italian Car Factory of Turin). The group chose one of its own, Giovanni Agnelli, who championed innovation, to lead the fledgling company in its early days. Within a year, Fiat’s first factory in Corso Dante opened its doors. The first Fiat assembled there was a Type 3, with 1 to 2 horsepower and it had no reverse gear. With the assembly line still several years in the future, the factory’s 150 workers managed to roll 24 units out the door in 1900. Fiat was off to a flying start.
Fiat enjoyed the first in a long line of competitive victories in its legendary racing heritage when nine Fiats crossed the finish line at the first Car Tour of Italy that same year. A Fiat 24 HP won the Sassi-Superga uphill race in 1902 with Vincenzo Lancia at the wheel.
In 1902 Agnelli officially became managing director of the company. Fiat produced its first truck in 1903 and adopted its blue oval logo a year later. In 1908, the Fiat Automobile Co. was established in the United States and a plant in Poughkeepsie, N.Y., began producing Fiats a year later. American consumers looked on Fiats of the day as luxury cars. Pressures from WWI would lead to the plant’s closure.
Begun before WWI and completed in 1922, the new state-of-the-art factory in the Lingotto district of Turin was the industrial marvel of its time. Raw materials came into the five-story building at the ground floor and the assembly line went up a winding ramp. Completed cars emerged at the rooftop level, where there was a test track.
About this same time, Fiat expanded into the steel and electricity industries and even opened a subsidiary in Russia. With the start of WWI, nearly all of Fiat’s production switched to supplying the war effort.
Fiat got by some post-war labor problems and by 1923 was once again expanding. Agnelli rose to the post of CEO. The introduction of mass production reduced production costs and the creation of a holding company — enabling customers to buy Fiats on an installment plan — stoked sales and profit growth.
Mussolini’s rise to power in the 1920s forced Fiat to abandon its international intentions and concentrate on the domestic market. In 1937 the Mirafiori Plant opened, increasing Fiat’s capacity.
WWII once again turned production from passenger cars to war materials. Automobile production wasn’t immediately resumed after the war because the majority of plants had been destroyed. It wasn’t until 1948–49 that production levels began approaching prewar levels. Agnelli died in 1945 and Vittorio Valletta replaced him.
This was about the time the original Fiat 500 launched and it included the first heating and ventilation systems installed in a Fiat. Fiat’s first diesel-powered car, the 1400, arrived in 1953.
Labor problems and strikes plagued Fiat in the late 1960s, slowing output and profit. In 1966, the grandson of Giovanni Agnelli, Gianni Agnelli rose to president of the company. Sharing his grandfather’s passion for innovation, he furthered automation at the plants. It was under his watch that the Fiat 127 was released in 1971. Named European Car of the Year, it was the first Fiat to feature front-wheel drive. In 1996, Fiat’s sales of $1.7 billion exceeded those of Volkswagen for the first time. Agnelli brought the Lancia brand into the Fiat family in 1969.
Robotics arrived in Fiat plants in 1978, increasing quality and lowering labor costs. The Alfa Romeo brand came into the Fiat fold in 1984, joined by Maserati in 1993.
Products worth noting in this era were the utilitarian Panda in 1980, the Uno in 1982 and the Tipo in 1989 that was voted European Car of the Year. The Coupe also launched about this time. Fiat put its first entry into the SUV arena when it introduced the Ulysse in 1994. In 1996 Agnelli became the honorary president of Fiat and Cesare Romiti held the office of CEO.
In 2000 Fiat entered into an alliance with General Motors ostensibly to exchange engine and transmission technology. Using its stock, GM purchased 20 percent of Fiat. There was also a provision in the agreement that GM would purchase the remainder of Fiat over the next several years or pay a penalty for failing to do so. Five years later GM paid Fiat $2 billion to end the marriage.
This was a troubled time for Fiat and it was failing fast. Agnelli’s death in 2003 cleared the way for a radical change in leadership and Sergio Marchionne stepped into the CEO position as Fiat’s fifth chief executive in five years.
Marchionne streamlined management and focused on profit. He turned the company around, putting it in a position to participate as one of the owners of the newly formed Chrysler Group earlier this year. The 56-year-old who brought Fiat back from the dead earlier this decade will try to repeat that success now as CEO of the newly formed Chrysler Group LLC.
Russ Heaps is a freelance writer based in South Carolina.