The History of Fiat

Italian car-maker Fiat has been around for over a hundred years. Originally standing for “Fabbrica Italiana Automobili Torino”, or in English, “Factory Italian Automobile Turin,” the acronym was dropped in 1906 and since then has simply been known as Fiat.

Fiat was founded in 1899 by Giovanni Agnelli, along with several investors. It’s inaugural car model came out that same year, the FIAT 4 HP, also known as the 3.5 CV. Originally designed by Giovanni Cerrano before the patents were purchased by Agnelli, the 4 HP ran on a water-cooled, 0.7-liter 2-cylinder engine which produced 4.2 horsepower at 800 rpm. Its speed topped out at 22 mph, and gas-mileage was 29 mpg. Though only 26 of them were ever made, demand was strong enough to lead to newer and better models (the 6 HP, 10 HP, 12 HP, and so on).

By 1908, Fiat had begun exporting its cars to the United States, had become a top manufacturer of taxis in Europe, and was producing Fiat aircraft engines in addition to automobiles.

After a trip to the U.S. in 1910 and a visit to one of Henry Ford’s factories, Agnelli was so impressed that he adopted many of Ford’s production techniques. Fiat built a sizable plant in Poughkeepsie, NY, signaling a significant presence in the U.S. market, though the Poughkeepsie plant had to be converted to the war effort when World War I broke out, and was eventually shuttered.

Fiat positioned itself at the center of Italy’s growing auto industry, and became the largest company in the country (a title it still holds to this day). By 1920, Fiat had an 80% share of the Italian auto market. Fiat took Ford’s ideas, such as assembly lines, and brought them back to Italy, where he built the largest factory in Europe in Lingotto, just outside of Turin. The Lingotto factory was so large and impressive, it even had an oval test track on the roof.

In the lead up to World War II, Fiat had more than 50,000 employees and was a major force in the Italian economy. When WWII came though, automobile production all but ceased and factories were converted to make armored vehicles and aircraft for the war effort. In 1945, after Mussolini was overthrown, the National Liberation Committee ousted the Agnelli family from control over Fiat because it was seen to be friendly with the Mussolini government.

Finally, in 1963, Fiat founder Giovanni Agnelli’s grandson, Gianni Agnelli, regained control of the company. Fiat underwent a period of explosive growth during the 1960s. By 1968 they had purchased fellow Italian automaker Autobianchi, sold 1.75 million vehicles, and had sales with $2.1 billion. They had become even larger than Volkswagen, their biggest competitor in Europe. During this period, Fiat also purchased Ferrari, Lancia, and airline Alitalia.

Fiat was hit hard by the oil price shock of 1973, and just a few years later a nearly 10% shareholding in the company was purchased by the Libyan government, whose stake wasn’t sold until 1986.

The company saw ups and downs through the 1980s and 1990s, having trouble competing with Japanese and Korean auto manufacturers. While on the one hand it acquired Alfa Romeo and Maserati, on the other, it was forced to spin off several of its businesses into independent companies and pull out of several international markets, such as the U.S. and Australia.

Fiat found its way back into the American market in with the introduction of the new Fiat 500. This happened by way of a deal they made in 2009, when they announced the acquisition of Chrysler. The deal with Chrysler was a mutually beneficial one, giving both companies access to broader markets and a better ability to scale and keep pace with bigger German and Japanese rivals such as Volkswagen and Toyota. Instead of acquiring their stake in Chrysler for money, Fiat instead paid to revamp Chrysler factories for the production of Fiat models, and shared their engine and transmission technology with Chrysler to allow them to build smaller and more fuel-efficient vehicles. The deal has worked out well for Fiat, and since then the deal has become a merger, out of which came the Fiat Chrysler Group in 2014.

Today, the Fiat 500 is a global icon, with more than a million vehicles sold in over 100 countries all over the world. Fiat Group has been awarded European Car of the Year twelve times in the last forty years, more than any other manufacturer, and nine times that award went to Fiat models, including the Fiat 500 in 2008.