Fiat moved swiftly on Tuesday to fill a power vaccum in its upper ranks and named turnaround expert Sergio Marchionne to be its fifth CEO in two years, pushing shares in the carmaker up over three percent.
Marchionne, the straightforward, media-savvy head of Swiss inspection firm SGS and a Fiat board member, replaces Giuseppe Morchio, who abruptly quit as CEO on Sunday, three days after the death of chairman Umberto Agnelli.
The new CEO immediately pledged to continue his predecessor's recovery plan.
Morchio, the man pushing forward a plan to pull Fiat out of its worst ever crisis, had reportedly sought the top job at Fiat, one jealously controlled by the family, and quit when the chairmanship was given to Ferrari boss Luca di Montezemolo who will coninue at the helm of the luxury car marque.
But the family lost little time in filling the CEO position after Morchio's shock departure.
"The good news is that a serious problem was resolved in less than 24 hours," said Lorenzo Colucci, head of equities trading at Mediobanca. "They couldn't have allowed a vacuum to develop at the top."
Fiat shares climbed to their highest levels in more than a month on Tuesday, before trimming gains of more than four percent to stand 2.5 percent higher at 5.89 euros at 1325 GMT, outperforming the DJ Stoxx Auto index, down one percent.
Fiat's May 25, 2011 bond strengthened slightly to 95.60 from 94.75 on Monday, while its credit default swaps, which measure the cost of insuring against a default on its bonds, narrowed to 445/465 basis points from 460/480 on Friday.
There was still concern about the turnaround at Italy's top industrial group after Morchio's departure. Analysts said it would take at least three months for the new CEO to get to grips with the tractor-to-robotics empire and that Fiat's recovery was bound to be hampered by the shake-up.
"Taken together, the management and strategic situation at Fiat has become more uncertain," Morgan Stanley said in a note.
Patrick Juchemich at Bank Sal. Oppenheim in Frankfurt said he hoped Marchionne would push forward with Morchio's plan.
"My fear would be that he will feel compelled to present a new plan," he said. "Every new plan means a delay and the company cannot afford that."
A former accountant, Marchionne will have to buckle down quickly to meet Morchio's target of hitting breakeven at group operating level this year.
"The cost-cutting measures do not go far enough and are not going fast enough. To break even in three years is not ambitious enough," Metzler Bank analyst Juergen Pieper said. "Fiat has to shift up a gear or two to have any chance at all of being a serious competitor."
Fiat shares have slid 11 percent over the past 12 months, making them the weakest performer in the sector.
Marchionne, 51, had been touted as a possible Fiat CEO in a previous round of management speculation but instead joined the board in 2003 to oversee the company's turnaround.
Fiat partner General Motors played down the reshuffle.
"We have had a positive relationship with Fiat and we look forward to that continuing," a GM spokesman in Switzerland said.