The Agnellis have always tended to take a back seat in the family business, preferring to recruit professional managers to run their Fiat empire. So the key to success has been finding the right person.
This can be a bit of a lottery, as Fiat’s recent turbulent past suggests. But with Sergio Marchionne, the Italian automotive group seems to have hit the jackpot. New to the car industry, Mr Marchionne took charge two years ago when Fiat was losing €2m ($2.6m) a day. It now earns €5m a day, its shares have outperformed European rivals, and Mr Marchionne yesterday announced ambitious targets to lift Fiat group car sales by 40 per cent to 2.8m vehicles a year by 2010 to start making “good money”.
With a string of new model launches, Fiat also intends to increase its European market share from 8 per cent this year to 11 per cent by 2010. If it succeeds, it will be bad news for rivals such as PSA Peugeot-Citroën and Renault. For the European market is no longer expanding and if a company gains market share, it does so at the expense of others.
Fiat is not out of the woods yet. But few gave its car division much chance of survival a couple of years ago. The secret of the turnround rests on two simple factors.
First, Mr Marchionne was given carte blanche to push through the radical changes the company direly needed. The fact that Fiat shares fell 4 per cent at one stage yesterday after a news agency wrongly reported that Mr Marchionne was leaving Fiat – he is only planning to step down next year as head of the car division to concentrate on his job as chief executive of the group – shows the value the market puts on the “Marchionne factor”.
Second, Fiat is again making good-looking cars people want to buy.
The group’s recovery seems to have given food for thought to rivals. Like the Agnellis, the Peugeots and the Fords have recruited industry outsiders to revive their fortunes. But no one probably needs to study the Fiat lessons more than Volkswagen, the German carmaker being torn apart by its own psychodrama.
The European Central Bank is scoring high marks for transparency this week. It is in the middle of a two-day conference in Frankfurt on the prominent role that money supply data plays in its interest rate decision-making, not to everyone’s delight. The occasion is noticeable not just because of its high-profile participants; it will be interesting to hear what Ben Bernanke, the US Federal Reserve chairman, has to say today about the ECB’s monetary “pillar”. The Fed is a known sceptic.
The ECB is also opening up its soul more than before. A research paper – written by Lucrezia Reichlin, the central bank’s research director, among others – is refreshingly clear about when money supply figures, such as for M3, have and have not affected monetary policy discussions over the ECB’s eight-year history. Moreover, the paper reveals the extent to which the statistics are subjected increasingly to “judgemental adjustments” – smoothed to strip out factors that clearly do not have a bearing on inflation trends.
Jean-Claude Trichet, ECB president, wrote in yesterday’s Financial Times of his attachment to using M3 and the like, as well as a more conventional economic analysis, when setting rates. His tone suggested that in spite of eurozone politicians’ pleadings, the ECB would take a hawkish attitude to rate rises in 2007. But you cannot escape the feeling that, thankfully, the ECB also applies a good degree of political and common sense.
Spanish companies looking for European scale constantly lament the thin pickings. BBVA, the bank, encountered hostility when it tried to take over BNL of Italy, and the infrastructure group Abertis is finding Rome insufferably obtrusive in its quest to merge with Autostrade.
Similarly, electricity companies see France and Germany as hard work at best and impenetrable at worst. Is it any wonder, then, that many Spanish chief executives see the UK as the only place to shop, or at least the first place to browse? The recent approach by Iberdrola, the country’s second electricity generator, to Scottish Power is the latest case in point. As Spaniards already run airports in the UK, collect its rubbish, service its railways, manage its water and control one of its banks and one of its mobile telephone operators, why shouldn’t they provide the electricity that makes these activities possible?
Spaniards love the transparency and tight regulation of the UK equity market and the lack of political intervention in corporate life. So enamoured are Spain’s corporate titans with the British way of doing business, they at times get carried away and say their own country is following the same model.
Up to a point. As Eon has discovered with its bid for Endesa, Spain is still closer to Italy than the UK in the transparency stakes. As for political intervention and protectionism, the country has France as its tutor.
Mark Mulligan, Madrid. Markm@ftmadrid.com