Gamma: Signs and Portents – Part Two

Fiat acquired the shattered remnants of Lancia in 1969. The Italian car giant was ill-prepared for what it discovered.

The 1969 Fiat 130 Berlina. Image via favcars
Corporate hubris? The slow-selling (if excellent) 1969 Fiat 130 Berlina. Image: favcars

Fiat made its name, reputation and not inconsiderable fortune from small cars, cost-engineered and rationalised to be inexpensive to produce, to buy and to maintain. During Italy’s post-war industrial boom, the Turin car maker grew massively, catering to the home market’s growing affluence and thirst for motorisation. By the late 1960’s however, Fiat’s management realised that over 70% of their car business was concentrated in the bottom end of the market – one with the least potential for profit.

Fiat saw their future upmarket, an arena hitherto unfamiliar to the Italian car giant and one the company had ignored in the post-war boom. However, they faced a fundamental problem, one that went to the very root of their corporate culture. Fiat’s modest yet technically brilliant engineering chief, Dante Giacosa, was ideologically opposed to a move upmarket and at Fiat, engineers exercised enormous influence.

In a detailed paper discussing the effects of Fiat’s takeover of Lancia, academic, Giuliano Maielli makes the case that “production engineers at Fiat had reproduced an engineering ideology. This is well reflected by Giacosa’s conviction that the role of Fiat was to produce cheap reliable and enjoyable cars for the people rather than expensive luxury cars.”

Despite his misgivings, Giacosa’s team embarked upon the design of a new large Fiat saloon – a car designed with at least one eye on the North American market. But the 130 Berlina, despite its many fine qualities, proved a lacklustre seller; chief amongst its deficiencies being the Fiat name, which failed to resonate with luxury car buyers.

The 1969 acquisition of Lancia therefore, was timely. It provided a ready-made nameplate with a proven record of engineering excellence and the sort of sober-suited upmarket image that would open all the right doors. All that was required was a series of cost-rationalised models to be developed and Fiat would be in a position to mop up a large chunk of the European upper-medium car market.

So went the theory anyway, reality proving a good deal more challenging. Fiat was already struggling to adopt a fundamental cultural shift from small to larger cars, but with key decision-making power regarding product retained within Fiat’s engineering department, (already known to be ideologically opposed to change), such moves were being resisted. Into this political maelstrom, Lancia didn’t really stand a chance.

A Lancia Fulvia Berlina comes off the Chivasso production lines prior to rigorous tests before delivery. Image via autoedizone
A finished Lancia Fulvia Berlina emerges from the state of the art Chivasso production lines in 1968. All complete Lancia’s were rigorously tested before delivery. These were quality cars. Image: autoedizone

It was hardly in a position to challenge Fiat’s predominance anyway. The company Fiat acquired in 1969 was a pale shadow of its glory days. “We have found the engineers’ drawers empty,” Fiat supremo Gianni Agnelli stated upon his acquisition of the stricken car firm. Dr. Antonio Fessia – Lancia’s acclaimed technical director had died in 1967 and due to Lancia’s financial woes, his position remained unfilled for well over a year.

Lancia’s product range had become dated – the flagship Flaminia débuted as far back as 1957 and their newest model (the Fulvia) to 1963. Due to the crisis within the company, there was little in hand to replace them, necessitating Fiat to start from scratch with the development of a new generation of cars, and in a first for Lancia, cost engineered. Agnelli appointed Fiat 130 project engineer, Sergio Camuffo as Lancia’s technical director.

Camuffo was reputedly horrified by what he found upon his arrival. Staff morale was on the floor and worse, engineers were departing in droves. Camuffo moved to arrest what was becoming a mass exodus, convincing key engineering staff to remain; namely chassis engineer, Romanini, and engine chief Ettore Zaccone Mina – (the engineer responsible for the Fulvia’s sublime V4 unit).

They embarked on a three year crash development programme for a new model to replace the compact Fulvia. Only with this car in hand, could thoughts turn to the development of more upmarket models.

Part 3 here
©Driven to Write. All rights reserved.
Sources, quotations & acknowledgements: see part one.

Author: Eóin Doyle

Co-Founder. Editor. Content Provider.

7 thoughts on “Gamma: Signs and Portents – Part Two”

  1. Giuliano Maielli’s research on Fiat’s takeover of Lancia is fascinating reading for anyone interested in the car industry from a business perspective, and great to see it referenced here.

    It’s interesting to reflect on Fiat’s acquisition of Lancia, and contrast it with similar takeovers by mass-market manufacturers of luxury marques- Ford with Jaguar or Aston Martin compared with Fiat and Lancia or Ferrari. Tata with Jaguar. GM with Saab, Volkswagen with… lots of companies. I tend to judge Fiat harshly over its handling of Lancia and Alfa Romeo in particular. But at the same time I have to admit that Fiat investment and management has done well overall with Ferrari and Maserati. At least if we can turn a blind eye to the Ferrari taste-free brand licensing juggernaut and the latest crop of middling Maseratis.

    I’m looking forward to the next installment of this story.

  2. In retrospect the Fiat 130 Berlina appears handsome; clean of line, like a well tailored but conservative suit. In the context of the space age, however, the car must have appeared hopelessly old fashioned.

  3. Chris: Wasn’t the Mercedes W-123 as old fashioned? I’ve read reviews of the car from launch and testers liked it. Only one has ever crossed my path: it was really well-made. So, did Fiat really have to savage Lancia in the way they did?
    If I had Bill Gates money, after I’d spent alot on valuable causes I’d love to resurrect Lancia. The brand really suggests a lot of creative possibilities.
    Thanks, Eoin, for this item: sad and fascinating at the same time.

  4. I think the Fiat case is very similar to the BMC (and later British Leyland) case. A combination of panicking management, a ‘communist combattant’ labor force (at Lancia they actually murdered some managers) and government interference (most notably Alfasud and Termini Imerese in Sicily).

    1. I would love to know the extent to which the Soviet Union was embroiled in the endemic industrial agitation of the period. Clearly they would have employed any tool at their disposal to destabilise the west, and the suggestion that militant factions and even the unions were receiving clandestine funding from the USSR has never quite gone away.

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