BALOCCO, Italy -- Fiat's top management has been working through the summer, preparing the ground for a new team that will lead the company's reorganized automotive unit.
Last month, Fiat group CEO Sergio Marchionne and Fiat Auto CEO Herbert Demel again postponed the target date for Fiat Auto's return to profitability. It is now set for 2007, a year later than the date set by then-Fiat group CEO Giuseppe Morchio in June 2003.
Marchionne took over as Fiat group CEO June 1 after Morchio resigned.
At an analysts' and investors' meeting here, Marchionne and Demel announced another major overhaul of Fiat Auto's management structure, the second in 30 months.
Demel is expected to name his new management team in early September.
In February 2002, Fiat Auto adopted a business-unit organizational model. The Fiat, Alfa Romeo and Lancia brands, plus spare parts and financial services, became companies within the company, operating their own profit-and-loss accounting.
That structure is now being dismantled, because it led to "suboptimal production and platform choices, to investments based on unrealistic market penetration expectations and to missed investment opportunities," Marchionne said.
The organization was "dysfunctional and unaccountable," he said, adding that it had saddled the company with "a self-inflicted industrial complexity." He also said there wasn't enough "operational benchmarking against the competition."
Some Fiat Auto executives agreed that the structure needs changing.
Under the now-defunct model, "we had five vertical, smaller companies that were each doing things their own way," said a senior Fiat Auto executive who declined to be identified.
Under the new plan, Fiat Auto will essentially return to the structure it had a few years ago. Fiat's auto brands plus its light commercial vehicles and aftersales divisions will have their own chiefs, as will the company's five car platforms. And there will be 15 support functions, each run by their own heads. All 25 will report to Demel.
The auto brands, light commercial vehicles and aftersales will each plan its own products and be responsible for marketing, sales, brand positioning and brand development.
One important change will be that a central Fiat Auto engineering department regains control of the design function, which includes the group's various styling centers. In the two previous reorganizations, these styling centers always reported directly to the brand or business units.
The new organization "is designed to create and nurture accountability," Demel said. The auto brands, light commercial vehicles and aftersales, as well as the financial services and fleet management divisions, plus the five platforms, will have their own profit- and-loss responsibilities.
Demel said he wants to speed up decision-making at Fiat Auto. "If we lack something, it is velocity in implementation," he said.
To increase Fiat Auto's speed, Marchionne and Demel are preparing the biggest top management overhaul in the company's 105-year history. Marchionne, who identified leadership issues as a problem at Fiat Auto, said he wants "young managers with international experience" in the top positions at the company.
Demel now has 18 direct reports, but half of these will get other jobs and, thus, won't be part of the 25 that will report directly to the Fiat Auto chief starting next month.