Founded over 100 years ago in Turin by the grandfather of its current chairman, Fiat spearheaded Italy's post-war boom, helped by successive Italian governments which effectively kept foreign cars out of the country. But as competition grew in the 1980s and 1990s, Fiat's market share began to slip.
Fiat Auto's European market share has slid from almost 14 percent at the end of the 1980s to just over eight percent at the end of 2002.
The crisis deepened in the late 1990s as Fiat's once mass-selling cars fell from favor among consumers in Italy and abroad -- under fierce assault from brands such as Volkswagen and PSA Peugeot -- and as huge outlays on factories from Brazil to China failed to reap hoped-for returns.
Fiat's cars have been plagued by a reputation for poor quality and bland design, the result of years of under-investment in cars as the group spent billions diversifying into factory robotics, insurance, farm equipment and utilities.
The Fiat Stilo, the company's attempt at a credible rival to the Volkswagen Golf, was a flop and became a key catalyst for the sharp decline at Fiat Auto in the last 18 months.
WHAT HAS FIAT DONE SO FAR?
Realizing the need for a partner in the consolidating auto sector, Fiat sold 20 percent of Fiat Auto to General Motors in 2000 with an agreement allowing it to sell the rest of the car unit to the Americans from next year.
The deal led to cooperation in developing the platforms on which Fiat and GM cars are made. But sales continued to fall, eventually pushing Fiat into the red and adding to debts.
Last year Fiat kicked off a restructuring focused on selling assets to raise funds to cut debts. A stake in sports carmaker Ferrari and more recently insurer Toro were among company jewels put on the block. Fiat Avio is also about to be sold.
Fiat axed 6,000 jobs worldwide in late 2001 and then 3,000 more jobs early in 2002, followed by 8,000 layoffs, most of them temporary. It turned to creditor banks for a three billion euro ($3.5 billion) lifeline in return for promises to cut debts.
Fiat Auto CEO Giancarlo Boschetti focused on the basics of the car company such as bolstering per-unit profits.
Under pressure from the banks and with no sign of a sales bounce, CEO Paolo Cantarella quit in June 2002 to be followed out the door by two more chief executives in quick succession.
Former Pirelli executive Giuseppe Morchio in February was named CEO. The arrival of an outsider, weeks after the death of former chairman Gianni Agnelli, was seen as a potential new beginning for Fiat. But the Agnellis kept their grip on the group as Gianni's brother Umberto became chairman.