On a cold morning in January this year, Italy remembered the 10-year anniversary of the death of Gianni Agnelli, patriarch of Fiat and a figure who loomed so large in Italian life he was often called the country’s de facto king.

President Giorgio Napolitano came flanked by politicians to the memorial service in the carmaker’s home city of Turin, where hundreds of well-wishers filled the streets.

“This is a confirmation that our roots are in this city,” said John Elkann, 37, Fiat chairman and scion of the billionaire Agnelli dynasty whose family members crowded the front rows of the cathedral.

Mr Elkann’s comments about Fiat’s roots have been remembered with some bitterness in Italy in the last few days as Fiat and its sister company Fiat Industrial crank up what appears to be the final stages of a push to become US-listed multinationals.

Chief executive Sergio Marchionne – the Canadian-Italian architect of Fiat’s salvation out of near-bankruptcy through a tie-up with US carmaker Chrysler – says he is looking at primary listings for the two groups in New York to gain better access to capital markets.

Carmaker Fiat will not deny that it is at the same time considering moving its main corporate headquarters to the US from Turin after a merger with Chrysler that is expected later this year.

Fiat Industrial, which was spun off from the motor group two years ago, has said for tax purposes it is planning to move its headquarters to the UK after completing a merger with its US-based tractor unit CNH Global.

Like the takeover of UK chocolate maker Cadbury by Kraft of the US, Fiat’s withdrawal from money-losing Italy as it becomes part of a global group has created a national sense of loss at a time when the country is struggling with a deep two-year-old recession and unemployment at a near-20 year high.

The buyout of Italian corporate names, from aerospace group Avio, to jewellers Bulgari and Pomellato, to dairy group Parmalat during the past two years have also added to a sense of national malaise.

“You want us to be happy about Fiat now being an international company. Fine, we are. But what about the people in Termini Imerese (Fiat’s now closed factory in Sicily)? They no longer have jobs,” a journalist challenged Mr Elkann on Thursday.

Mr Elkann’s response was to voice a feeling strongly held by the Agnelli shareholders and by Mr Marchionne that globalisation was the only option to keep Fiat alive and prevent tens of thousands of job losses. “Do you think Fiat would still be here if it were not for the deal with Chrysler?” Mr Elkann replied.

Investors and analysts, by and large, share that view. The anticipated merger with Chrysler will help boost the cash in the heavily indebted group and allow Mr Marchionne to shift emphasis from Europe, Fiat’s only money-losing region,
that is stuck in a crisis of structural overcapacity.

Max Warburton, global autos analyst at Bernstein, considers Mr Marchionne’s plan to be “genius”.

“This guy is saying, it is my job to run a profitable business, I’m a capital allocator and I’m not willing to sit here in Italy and burn cash into perpetuity. Leaving aside the national politics, no investors are going to complain about that, nor is the [Agnelli] family, nor should Fiat engineers and staff who will be part of a bigger and more secure business,” Mr Warburton says.

Other analysts argue that Fiat has not gone far enough and should be closing more of its under productive factories in Italy and focusing on its 100 per cent productive plants in Brazil or eastern Europe.

In the first quarter, Fiat Chrysler’s operating profit fell to €603m. Nonetheless, its largest profit came from North America, followed by Latin America and Asia. In Europe, it made a loss of €111m. Fiat has estimated that it is three times more expensive to make cars in Italy than in Poland.

Massimo Vecchio, automotives analyst at Mediobanca Securities, believes that in order for Mr Marchionne “to sort out the European issue”, Fiat should close plants to improve its utilisation rate.

Closing one plant would increase capacity utilisation to 55 per cent, Mediobanca estimates; closing two plants would bring the utilisation to 66 per cent. Car companies tend to turn in a profit with a utilisation above 80 per cent, Mr Vecchio adds.

But Fiat’s strategy does not envisage a wholesale retreat from Italy in part, managers say, because it would be counter-productive. Mr Marchionne wants to use Italy as a base for the export of premium or design-led vehicles – such as its Fiat 500, Maserati, Alfa Romeo and Ferrari – meaning he needs Fiat’s Italian qualities to appeal to consumers, especially in the US and China.

In the US, one of Fiat’s most successful television advertisements shows the “Italian-designed Fiat 500” driving the lush winding roads of the Amalfi coast.

Consequently, Fiat insists it will maintain its Italian factories, although regularly on shorter shifts. It has put €1bn into developing a new factory at Grugliasco, near Turin, to make premium vehicles for export such as the Maserati.

Mr Marchionne earlier this year said that sales of its long-delayed Alfa Romeo launch to US consumers were dependent on it putting an Italian-made engine in the car. “There are some things that are well done in Italy,” he said.

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