The Fiat Group reached a turning point in its history yesterday as after more than a century as one of the world's most flamboyant industrial conglomerates built up by the swashbuckling Agnelli family it is finally to be split up, with two new companies set to emerge. The plan is set to be executed swiftly, the presentation targets this November and December for listing, with Fiat CEO Sergio Marchionne saying yesterday: "We can finish the project within six months."

The idea of a "spin-off" of Fiat Group's automotive activities has been talked of for decades, a separation that would unlock true shareholder value but it has always been fiercely resisted by the Agnelli family who built the empire and in recent years the late Fiat Chairman Gianni Agnelli was staunch in keeping the company together. However the colossus that the Agnelli's built has been hacked down over the years, particularly as the automotive division has demanded infusions of cash, most recently, the Group's aeronautical activities, under the "Fiat Avio" banner were sold off to a venture capitalist to help plug the gap during the carmaker's last downturn just under a decade ago. Now it is believed that newly-installed Fiat Group Chairman John Elkann has been instrumental in talking the family members into signing up to Marchionne's ambitious plans. On Tuesday current Chairman Luca di Montezemolo quit the post with media reporting he was unhappy with the direction the company was taking.

Yesterday Fiat presented the plans as a "demerger" rather than a "spin-off", with the bulk of the automotive assets being grouped into a new "Fiat", comprising of Fiat Group Automobiles (Fiat, Abarth, Alfa Romeo and Lancia), as well as Ferrari, Maserati, the components' divisions and Fiat Powertrain's (FPT) automotive activities. Into the new "Fiat Industrial" company will go the agricultural-and-construction equipment supplier CNH Global, the truck-and-buses unit Iveco, and FPT's industrial-and-marine activities. Most previous demerger talk has focused on separating the activities of FGA, this plan through creates a full-line automobile manufacturer, in theory though it is the other divisions that are being 'demerged', and the rump of "Fiat Industrial" will most likely be sold off piecemeal in the future when the time is right: CNH has little fit with any of the Group's activities while Iveco will be free to join the consolidation taking place in the battered truck industry or become even more closely associated with its ambitious Chinese partner.

Fiat sees the driving factor in a demerger being that: " Auto and industrial substantially differ in terms of earnings cycles, volatility, capital requirements, and returns on capital employed," and that "demerger would: provide strategic and financial clarity, enable each business to develop independently as needed, and additionally, unlock valuation potential of capital goods activities."

The new demerged Fiat Industrial (FI) will own CNH, Iveco and FPT Industrial & Marine activities. FI will be created with classes of shares exactly mirroring Fiat’s current structure with all three classes of shares of FI to be listed in Milan simultaneously with the demerger completion while very Fiat shareholder will own one share of Fiat and one of FI after the demerger and listing. The timetable envisions a full presentation of the plan by July, approval and execution from July to November and closure and listing from November to December.