Legendary family dynasties play cat and mouse

Turin and Wolfsburg might not have much in common at first glance, writes David Bain.
 
For one thing, Wolfsburg is in Germany and has a population of just over 100,000, whereas Turin is in Italy with nearly one million inhabitants. It's probably also fair to say that the temperament of each other's citizens might have little in common.  
 
But there is one thing that unites both of these towns – car making.
 
Wolfsburg is the headquarters of the world's second-largest carmaker Volkswagen, whereas Turin is home to the ninth biggest, Fiat.
 
Both automakers are steeped in much history and have made some of the most iconic car marques ever like the VW Beetle and the Fiat 500.
 
Both are also controlled by two great family business dynasties – the Agnelli and the Piëch families. Thirty percent of Fiat is owned by decadents of the Agnelli family and the Piëch family own around the same amount of VW.
 
Rivalry between the two car companies goes back years – both vie to be the number one manufacturer of cars in Europe. VW currently holds that crown, but Fiat wants to grab it away.

Nevertheless, for years VW appeared to be little concerned about Fiat's challenge. The Italian carmaker was often dogged by reliability problems of its cars as well as difficult labour relations. But under the joint leadership of Sergio Marchionne, chief executive, and John Elkann, chairman and family principle at Fiat, the fortunes of the Italian carmaker have been revived.
 
To such an extent that Marchionne, backed by his chairman, is saying that Fiat would be interested in buying two truck divisions with ties to VW.
 
Fiat recently split out its profitable truck division as a separate company and looks keen to make acquisitions to consolidate its position in a fast growing section of the automobile industry.
 
Reports in the media suggest VW's management was taken by surprise by the audacious acquisition attempt by Fiat.

But the comments only follow on from those made by Ferdinand Piëch, chairman of VW and family principle at the company, who said last October that his company would be interested in buying Alfa Romeo from Fiat.
 
The verbal spat between two of the most prominent family-controlled manufacturing businesses in the world probably won't end there. The stakes are too high.
 
But competition between the two is beneficial to economic competition and innovation. And it is here that family businesses often have a sharp advantage over their non-family competitors.  
 
VW and Fiat are showing the way.