FIAT

FIAT Cars

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The Italian Automobile Factory of Turin (Fabricca Italiania Auttomobili Torino) more generally known as Fiat was founded in 1899 by an investment group headed by Giovanni Agnelli (not to be confused with his grandson who ran the company from 1966 to 1996. Born in August 13, 1866 Giovanni Agnelli, like his father before him, was also mayor of his hometown of Villar Perosa, Italy.

After college, Agnelli served in the Italian military until 1893, when he returned home to become Mayor in 1895; a position he held for the rest of his life. With an investment of $400, Agnelli become one of the founding partners of Fiat on July 11, 1899. He became managing director in 1900, and chairman in 1920. The company opened its first factory in 1900, producing 24 Fiat cars with a staff of 35 workers. Finding ready acceptance, by 1906, the company was up to 1,149 Fiat automobiles annually and was operating in the black.

When Fiat went public in 1906, Agnelli sat about buying as many shares as he could.

The largest automobile company in Italy by 1910, Fiat has been the dominant Italian auto manufacturer ever since, and by association Giovanni Agnelli became one of the richest men in Italy. Expanding overseas, Fiat built a factory in Poughkeepsie, New York to take advantage of the popularity of Fiat vehicles in the American marketplace.

In those days a Fiat car was an exotic purchase in the U.S., as well as an expensive one. A 1908 Fiat automobile cost $4,000, while a 1908 Ford Model T could be had for $825. Ironically, as manufacturing efficiencies drove the cost of a Model T down, the price of a Fiat auto escalated. By 1918, $525 would put a Model T in your hands—but the Fiat automobile's price had escalated to $6,400.

Thus riding high, Fiat went into World War I in pretty good shape.

Wartime business included producing trucks, ambulances, airplanes, engines, and even machine guns. The American factory was closed in 1917 because of regulatory pressures, but Fiat went on to gain an 80 percent market share in Italy. By now operating a number of factories, and having diversified into producing tractors in addition to cars and trucks, Fiat automobiles was deemed a takeover target by the Communist Party in 1921. The workers took over and Agnelli left the company.  That only lasted a year before being set aside by Italian labor organizations and Agnelli returned.

In 1923, the company opened its first assembly line oriented factory at Lingotto, Italy. With the efficiencies achieved by that undertaking, Fiat automobiles expanded its Italian market share to 87 percent by 1925. Among the marketing innovations introduced by the company, Fiat included car insurance with the price of its 1928 509 model.

When Mussolini took Italy into World War II, Fiat built aircraft and light tanks, neither of which were particularly competitive. In fact, they were largely obsolete right off the production line—compared to the hardware the Germans and the Americans put on the battlefield. Fiat did eventually produce an up to date airplane, but it came too late in the war to be of any effect. When Mussolini was overthrown in 1945, the Agnelli family’s leadership role in the company was ended for some 18 years. In 1963, Agnelli’s grandson, Giovanni “Gianni” Agnelli took over as general manager.

The younger Agnelli was born March 12, 1921. Named for his grandfather, but called Gianni to reduce confusion, Agnelli was wounded twice in World War II. After the war, he served as a liaison officer with U.S. troops because his education afforded him fluency in English. When he took over the company, he set about modernizing things and expanding the company’s influence around the world.

Gianni opened factories in Russia and South America and initiated other international alliances. His associations with the Communist party enabled him to overcome labor problems and ultimately decimated the influence of labor unions in Italy. Gianni also masterminded the growth of Fiat automobiles by acquisition. By reorganizing the company’s management strategy into a more delegatory situation, he freed his executives up to make broader, farther-reaching decisions.

Fiat automobiles bought Autobianchi in 1967, and controlling interests in Ferrari and Lancia in 1969, while also diversifying into a number of other industries. The company bought the Italian airline Alitalia and held an interest in the office machine company Olivetti. It also owns toll roads, a paint company, an international construction company, and a variety of other interests.

In the United States, Fiat vehicles were best known for being small, quirky, fun to drive cars with good fuel economy—if not exactly stellar reliability. The Fiat 1500 was quite popular in the mid 1960s. Fiat’s rear engined 850 cars sold pretty well here in the early 1970s, which included an open two-seat sports car. The Fiat 124 sports car was the most notable of the Fiat vehicles offered here in terms of sales—examples of which can still be seen running around today.

Fiat introduced its more upscale Lancia brand to the U.S. in the 1970’s. Lancia’s uniquely Italian style and luxurious appointments helped them make some inroads, but ultimately they failed along with the Fiat X1/9 and the front-drive Fiat 128 cars. The company left the U.S in 1984. General Motors tried to do a deal with the company in 2000, which Fiat benefitted the most from by using the capital influx to develop new emissions control technology. In the interim, Fiat became the equivalent of GM in Italy, ultimately purchasing or controlling practically every major Italian automaker, save Lamborghini. These include Alfa Romeo, Ferrari, Lancia, and Maserati.

Gianni Agnelli ran Fiat until 1996.When he stepped down; he remained on the company’s board of directors until he died in 2003. To date, the most noted leader of the company since Agnelli has been Sergio Marchionne, current CEO of the Fiat Group—who has breathed new life into the company.

One of his triumphs was the purchase of Chrysler in 2009.

This gave Fiat automobiles a ready-made distribution network in North America and led to the reintroduction of the brand to the United States. The platform underpinning an Alfa model is currently being marketed as a Dodge, and there are plans to formally bring that marque back on its own right in the near future. The Fiat 500 was reintroduced to the U.S. in 2011, and has since spawned several models.

As of this writing, Fiat’s future looks quite promising in the U.S. marketplace.