Ferrari boss’s departure is more about business than F1

Profound differences exist between Luca De Montezemolo and the Fiat chief executive

Luca Cordero di Montezemolo at a press conference in Maranello, Modena, Italy, today. Montezemolo said he was resigning after 23 years at the helm, in a move that had widely been expected after his record was questioned by parent company Fiat-Chrysler. Photograph: EPA

Luca Cordero di Montezemolo at a press conference in Maranello, Modena, Italy, today. Montezemolo said he was resigning after 23 years at the helm, in a move that had widely been expected after his record was questioned by parent company Fiat-Chrysler. Photograph: EPA

 

At first glance, the resignation today of Ferrari chief executive Luca De Montezemolo, has a football-style, manager sacking look about it. You have been losing all season long in the Premiership, so it is time you packed your bags, Luca, no?

In reality, of course, the end of Montezemolo’s highly successful 23 year association with Ferrari is much more about business strategies for the world’s most exclusive sports car than about Ferrari’s failure to win a Formula One Drivers’ Championship since Kimi Raikkonen lifted the title in 2007. At stake are profound differences between Sergio Marchionne, the chief executive of Fiat, the automobile maker which controls a 90 per cent holding in Ferrari, and Mr. Montezemolo.

Of course, the Formula One paralells impose themselves because the long standing tensions between the two men became public during last weekend’s Italian Grand Prix at Monza.

This has been a disasterous season for Ferrari, who have not won any of this year’s 13 races, have managed only two podium finishes and currently lie fourth in the Constructors’ Championship, behind Red Bull, Mercedes and Williams. Last Sunday’s results, with Ferdinando Alonso’s car failing to finish and Kimmi Raikkonen coming in ninth in front of the home fans, did not help either.

In much publicised comments, Marchionne called the current Ferrari Formula One performances “unacceptable”, saying that a thoroughbred like Ferrari has winning encoded into its DNA. He also appeared to criticise 67-year-old Montezemolo when the latter offered to stay on in charge of the company for another three years. No one is indispensable, he said, in a tone that sounded distinctly menacing.

In reality, however, the shake-up, which sees Marchionne take over Montezemolo’s job, is much more about business than about motor car racing, much more about bitterly opposing views for the future of Ferrari.

The quasi-aristocratic Montezemolo, who has spent his life working in Fiat or Fiat-controlled companies has always seemed like a favourite, adopted son to the Agnelli family which still controls 30 per cent of Fiat Chrysler Automobiles (FCA), as the new merged company is now called.

Montezemolo represents a sentimental and historcial link between today’s Ferrari and the past, having worked side by side with Enzo Ferrari himself, founder of the company. In that context, he sees Ferrari as the ultimate family jewel in the Agnelli coffers and wants to maintain its exclusivity, limiting the number of cars produced annually to 7,000 and restricting the production and design base to its historic Maranello factory, near Modena.

Analysts point out that Montezemolo has enjoyed significant success with Ferrari. In the early 2000, Ferrari won five straight world titles when German Michael Schumacher was its star driver. In recent years, too, Montezemolo has done much to expand Ferrari’s market in Asia, the Middle East and the Arab world.

Many commentators argue however that Marchionne, the man who masterminded the takeover of Chrysler, might be tempted to cash in on Ferrari’s huge business success by way of an initial public offering. Alternatively, it has been speculated that he might want to use Ferrari as the flagship for a new luxury brand group, also involving Maserati and Alfa Romeo, two other Fiat controlled car makers. In that case, too, he might increase production to 10,000 a year.

For his part, Marchionne denied such speculation at the Maranello press conference where the resignation of Montezemolo was confirmed. What is definite, however, is that he will take over from Montezemolo on October 13th, the same day Fiat Chrysler Automobiles (FCA) debuts on the New York Stock Exchange.

Many commentators argue that the shake-up has been precipitated by that forthcoming stock market launch with Marchionne keen that speculation about the future of Ferrari, or indeed a legal battle about the chief executive’s job, would not ruin the party.

For the time being, the news has been greeted favourably by the stock market, with Fiat shares rising by 1.5 per cent in Milan. That, too, despite the fact that Fiat’s European market share has fallen steadily between 2009 and 2013, with the company currently ranking sixth, behind Volkswagen, Peugeot, Renault, General Motors and Ford.

Last but not least, Montezemolo’s “cosensual” divorce could see him pick up severance pay of up to €15 million euro.