'If I had been told when I was a boy that I would become a partner of GM, I'd never have believed it.'
So said Giovanni Agnelli, patriarch of the family that controls 30 percent of Fiat SpA, upon learning on the morning of March 12 that a deal had been struck with the US auto giant to form an equity partnership. That was a special day for Agnelli for two other reasons: It was his 79th birthday, and his Ferrari team had just finished first and second in the season's first Formula One race.
Making the victory all the more satisfying, DaimlerChrysler's McLarens had been forced to drop out with blown engines after dominating the first part of the race.
Shortly before, DCX's offer to acquire all of Fiat Auto had blown out, too. Agnelli himself was the most determined opponent of a complete sale of the auto operations, even if it meant clashing with Enrico Cuccia, the 92-year-old head of Mediobanca, Italy's most influential merchant bank and a historic strategic ally of both Fiat and the Agnelli family.
'Cuccia told me that the best thing to do would be to sell to DaimlerChrysler, then sell the DCX shares, pocket the gains and never think about cars again,' Agnelli told the newspaper La Stampa.
'I told him I don't live in the clouds. I can't go and retire to the island of Tonga with a backpack loaded down with billions of German marks. Our job is to make cars, to make cars of the future.'
Despite the patriarch's objection to a complete takeover, many industry executives and analysts wonder whether the deal with GM was structured to give the family a convenient exit strategy. Paolo Fresco, the Italian who Agnelli recruited from General Electric to reshape Fiat Group, presented the alliance with GM as 'the best possible deal.'
The market has had a different view: Fiat shares fell 16 percent the day after the deal was announced and finished the week on the Milan stock exchange at A29.9, down 3.3 percent on the day.
Despite the market's impatience, though, the deal will allow the two partners to share costs on a projected 5.5 million units a year. That combined volume, and the efficiencies to be gained from scale, makes their forecasts of saving some $2 billion a year by 2005 seem credible.
And that's an added bonus in Europe and Latin America, two areas where the makers fight on miniscule margins. That money flows to the bottom line whether or not Fiat Auto remains fully independent in the long term.