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Carissimi Lancisti-

I was recently reading a report by Global Auto Systems about the intended plans of Italian Entrepreneur Roberto Colaninno if he were to take over as FIAT Auto CEO in the near future.

For those of you who are not familiar with the current situation, FIAT Auto (along with Lancia, Alfa Romeo and the Fiat brand) are in some serious trouble at the moment. They have had seven years of losses and last year they finished ended with a 1.9 billion dollar loss. Italian businessmen such as Emilio Gnutti and Roberto Colaninno have been "urged" by Italian Prime Minister Silvio Berlusconi to take action and help save Fiat. Berlusconi hopes to keep FIAT Auto in Italian hands and prevent an all out sale to General Motors.

Roberto Colaninno stepped forward at the beginning of January with a re-capitialization plan that would have the Agnellis, GM and Colaninno himself investing more than US$5 Billion to save FIAT Auto. Colaninno is the guy who purchased Telecom Italia a few years back, went on a shopping spree, doubled the value of Telecom Italia then was ousted by Gruppo Pirelli in 2000. He's been sitting on a mountain of money ever since and is viewed as a financial genius in some circles. Colaninno plans on selling other Fiat SpA divisions such as Toro Insurance and Fiat Avio to raise cash. He will also oversee a majority control, in hopes of obtaining a "friendly takeover" from the Agnelli's and GM.

Sounds good right? Well, here's the bad news. In return for taking the CEO position for only five years and returning FIAT Auto to profits, Colaninno also plans on SCRAPPING the Lancia Division! This is in hopes of salvaging the Fiat and Alfa Romeo brands by redirecting Lancia's engineering resources.

Now here's the good news - It may never happen! It really depends on Umberto Agnelli, GM and Fiat SpA's creditor banks such as Capitalia, SanPaolo, and UniCredito.

A few weeks ago Italian businessman and Honorary Fiat Chairman Giovanni (Gianni) Agnelli died of prostate cancer. Gianni ran Fiat SpA for more than thirty years and oversaw the acquisiton of Lancia, Ferrari, Alfa Romeo, Maserati as well as smaller marques (anyone remember AutoBianchi or Cistalia?). He was a living symbol of the post-war Italian economy that pushed Italy to the sixth largest market in the world. In fact he was dubbed the "uncrowned King of Italia". Anyway, he was opposed to any sale of the car division. His brother Umberto is not as attached as his older brother Gianni was and might look to sell the company outright -- the reason being that the poor performance of FIAT Auto is bringing down the stock value of the entire Fiat SpA empire.

However, the Italian press has been saying that the Agnelli family as a whole is committed to FIAT Auto. Recent articles have said that inside source see the Agnelli's looking very unfavorably on the possible "friendly takeover" by Colaninno. Umberto Agnelli himself is seen as a possible successor to Paolo Fresco (Fiat SpA's current Chairman) when he stepps down in July. A more likely scenario will be that FIAT Auto is spun off into a separate company from Fiat SpA, GM and the Agnelli's will each take around a 40% stake in a recapitalized FIAT Auto and the remaining 20% will be held by banks and other parties. If this is true, then hopefully the sale of the car arm (and the scrapping of Lancia) can be prevented.

So that's it - just thought you would all be interested in this news.

Alla Prossima-

A Presto,
Nicola

To me it looks like the guys are playing a game of Monopoly instead of making Italian cars. When I play a game of Risk with the kids, the situation at the table is very similar to what is going on with Fiat Spa right now.

And, as I see it, Lancia cars was "scrapped" some time ago. Best drop the name "Lancia" too rather than abuse it.

it is a difficult one to decide but I hope that Lancia can continue but with more individuality,ingenuity and flair than has been shown recently the thesis is interesting but seemingly only to elderly statesman etc...surely they can give the cars a less dowdy image and maybe a bit more GO!!! too, Alfas are no substitute

I agree with Huib. Real Lancias are almost ancient history. Why have their reputation confused with bland offerings from a huge corporate combine that are only "Lancia" because that's the badge that was bolted onto them? Fiat itself seems to have lost its way since the demise of Dante Giacosa and Aurelio Lampredi.

Italia financier Roberto Colannino, the former head of Telecom Italia and Olivetti, has submitted his proposed €9 billion rescue package to the Fiat board. His plan, which includes abolishing the Lancia name altogether, would see a group of investors headed by him pumping in €1bn, GM providing around €1.5bn, selling the Avio and Toro divisions to raise another €4bn, while a writes issue underwitten by a consortium of banks led by Lehman Brothers and UBS Wartburg would make up the remainder.
Colannino, who is openly not hopeful that his bid will be successfull, expects Fiat to lose a further €3.5bn during 2003-04 as cash is pumped into developing new models and upgrading the dealer network.

Meanwhile talks to recapitalise Fiat are going on apace. Fiat wants GM to invest around €2bn to take its stake to 40%, while deferring the "put" option to 2007/8, but without parting with any assets. GM is open to the idea of raising its stake in Fiat Auto from the current 20% to around 30-40% in exchange for dropping the "put" option, but will only invest in exchange for obtaining assets including the Alfa Romeo brand and the profitable South American operations.

GM's proposals are being firmly resisted by the Fiat board, so a compromise mooted would see a further 20% stake being sold for €1.5bn, with the South American operations being pooled into a joint GM/Fiat venture.

Yesterday Umberto Agnelli, the new head of the Agnelli clan, was invited to take part in a meeting with Fiat's creditor banks and the Group's top management. It is widely expected that Umberto will replace Paolo Fresco as Group Chairman this summer. The banks are believed to be alarmed at reports that the "put" option with GM, which they regard as a vital "safety net" is to be sacrificed, the meeting was demanded by them to clarify the progress of talks..

THIS IS FROM www.italiaspeed.com

one thing that seems to always be lost in this long standing discussion is that ALL cars seem to have lost their lineage apart from a very small number of marques. Up to the early 70s there were many admirable makes each with their own identity which was clearly defined by their history and linked to their founder, I can't think of any that still have this in the mass produced market place so lancia is not alone the loss is just greater because they were SO good in the past that they surpassed anything else

It seems the Fiat group would only divert their attentions to Lancia once their expectations with Alfa had been reached. It seems that Alfa are now well and truly on their way ... which is why you may have noticed recently the number of Lancia concepts and products that are coming down the pipe. We will shortly have the Venus (Ypsilon), revised Thesis engine line-up, Fulvietta, Granturismo concepts, Y-MPV, Libra restyling etc. etc. Hopefuly this product blitz will shore up generally declining sales ... the Thesis has been well received despite the unfamiliar styling cues. Good product (156 and 147) got Alfa out of trouble, now hopefully Lancia can repeat the success. Unfortunately the apathy of the car buying public, especially in the Italian home market, may be difficult to overcome.

Of course you are right, Alan. But I'd rather that my beloved Lancia name remained associated only with glories of the past rather than bars of soap of the present.

I look at what has happened to Maserati since its absorption into Fiat. While there are worse fates than being overseen by Ferrari (and I will probably buy the current model once it's old and affordable), Maserati had a genuine Maserati concept in the 3200GT. It was scrapped with the Ferrari linkup. I personally would have preferred the smaller displacement twin turbo car over an undoubtedly excellent car that is somebody else's idea. Because they have a common ownership, Ferrari and Maserati cannot compete with each other. This ties their hands. The same happened when Alfa came into the fold. Fiat didn't really need Lancia any longer. Certainly the more sporting aspects of Lancia were nullified in order to avoid competition with Alfa. Many of Lancia's great cars were conceived partially as competition to Alfa. The Fulvia is the most obvious and direct example, however I'm sure that Alfa was one of the targets for the Beta coupe and also for the Delta integrale. All of that's over.

Perhaps what you are saying is true... But it doesn't necessarily mean it's correct. What I am trying to say is ths: Look at GM and the number of brands they own in the US. Buick, Chevrolet, Pontiac, Cadillac, Saturn and the now closed Oldsmobile (Perhaps there are more, but I can't remeber them all). Do you believe that none of these brands have conflicting products in the market? I don't think so. And they have been working like this since the 1920s...

What I believe FIAT/Lancia needs to sort out is what they really want Lancia to be: A low-volume luxury maker or a high-volume undefined manufacturer. And I think the recent trend points at the first choice. The real problem now is getting people to believe in the brand and deliver products that can compete with similar manufacturers such as Mercedes. Given the Group's current financial situation this is getting even more difficult.

Having common engines is not really a problem either... Think of Jaguar and Lincoln. Jaguar uses a more powerful version than Lincoln does and nobody complains about that. You could use the same basic engine for cost reasons, yet completely alter the engine control software and get a very different responce to suit your purposes.

I agree with Alexandros point of view. Sharing engines and components is really not that big of a deal as long as it doesn't sacrifice the "character" of the brand. There are a huge number of cars out there that do it and don't sacrifice the character of the marque. For example, BMW, Lexus/Toyota, Jaguar/Ford, Audi/VW, etc. all do this without sacrificing anything.

A better example - Alexandros makes the point that in America, GM essentially has around 6 brands (not including Saab) that share components. Certainly there is some overlap between the brands. However, the characteristic and driving dynamics of each brand is it's own, regardless of the fact that they share components and engines.

Another example of this would be VW. VW overall has seven brands. Four of them, however, share a great deal of parts. For those who are brand snobbs, please explain the difference to me between a Golf and an A4, Skoda Fabia, or Seat Toledo? Aside from sheetmetal, there really isn't much of a difference. They, and many of the vehicles produced at VW Group, are essentially rebodied and repackaged VW Golfs. Here in America, you can buy a Golf with a 1.8T in GTI trim for around US$23,000 or so. Let's not mention that it's built in Mexico and shares components with 75% of the cars that VW Group builds world-wide. Now look at an A4 with a 1.8T. Decently loaded here in America, it costs upwards of US$28,000 or more for what is essentially a dressed up Golf. Is it worth it? Perhaps..or perhaps not. Depends on your perspective.