The Rearview Mirror: The Founding of Fiat

The first Fiat, the Fiat 3-1/2 Liter

For most Americans, the first time they heard the name Fiat was when the Italian automaker bought a significant stake in Chrysler Corp. after it declared bankruptcy in 2009. Not long after, the Fiat 500 arrived, along with a failed attempt to become the next hot small car brand a la Mini.

But the company has American roots that date to the turn of the 20th Century — even longer in Italy. During this week in 1899, Fiat is established by Giovanni Agnelli.

The start of a family empire

Giovanni Agnelli, founder of Fiat

Agnelli was born in Italy’s Villar Perosa in 1866, later attending the Collegio San Giuseppe in Turin. He enlists in the military after graduating and working as a cavalry officer there until 1893, when he learns of a hot new invention: the “horseless vehicle.” 

One such vehicle is being built by Ceirano GB & C automobile company in Turin. Founded in October 1888 by Giovanni Battista Ceirano, the company begins building the Welleyes automobile in 1899. Meanwhile, at the same time across town, Agnelli establishes Fabbrica Italiana Automobili Torino, or Italian Car Factory of Turin, with a group of investors. Later, the corporation shortens its name to Fiat. 

Agnelli knows a good thing when he sees it, acquiring the Wellseye’s patents and manufacturing facilities that same year. Giovanni joins Agnelli as the Wellseye becomes the basis for the company’s first model: the Fiat 4 HP.

Thirty-five people worked in Fiat’s first factory when it originally opened in 1900. Agnelli was the youngest of the three founders of the business, acting as secretary to the board, but in 1902, he is promoted to managing director. 

Fiat’s American adventure

The first Fiat factory in Turin, Italy.

As a result of Agnelli’s leadership, Fiat opens a dealership in New York City in 1906, selling imported Fiats to such customers such as August Anheuser Busch Sr. of the St. Louis-based brewing company that bears his name. Unlike today, where Fiat is known for its diminutive, affordably priced cars like the 500 and 500X crossover, a century ago, it was quite the opposite; the company built large luxurious touring cars and limousines. 

By 1910, is Italy’s largest automaker.

It’s about this time that Agnelli builds the company’s first foreign manufacturing site in Poughkeepsie, N.Y. Creating an American factory at that time was unusual for a European corporation like Fiat. Wall Street, which in 1909 provided funding for the American Fiat Automobile Company, applauds the decision. While Agnelli inexplicably installed diamond merchant Ben Eichberg as American Fiat’s president, other senior officials had worked at automakers, including Pope-Toldeo, Lozier and Thomas. Additionally, since “The Horseless Age” magazine’s board included Fiat’s treasurer John Treas, excellent coverage was guaranteed. The company’s cars were designed in Turin and built in Poughkeepsie, with royalties paid to its Italian relative on each car sold.

Fiat’s first foreign factory in Poughkeepsie, N.Y.

What they sold

The company’s first model was the four-cylinder, 30-horsepower Type 54. In 1912, the larger Type 56, a seven-passenger Touring automobile built particularly for the American market, was released. It had a large 8.6-liter L-head six-cylinder engine that was mated to an unsynchronized four-speed manual transmission and rear mechanical drum brakes to produce 45 horsepower. The 42-horsepower four-cylinder Type 55 debuted in 1913, while the following year, the 25-horsepower four-cylinder Type 53 arrived. With four models offered, 1914 would turn out to be the company’s early high point.

A turning point

American-built Fiats in the company’s factory in Poughkeepsie, N.Y. Photo Credit: Simeone Foundation Museum

However, increased production capacity was required, “something the Italian owners are at present unable, or unwilling to undertake,” reported The Poughkeepsie Daily Eagle at the time, adding that Fiat was extremely successful and planned to grow after the war. However, once Fiat in Italy acquired the American business in 1917, the Type 55 became the only model available until the end of the year, when production ended as a result of World War I.

Several trade magazines stated in February 1918 that Duesenberg Motors of Elizabeth, New Jersey acquired the equipment from the Fiat facility to expand the production of Bugatti aircraft engines. Fiat officials promised to start making automobiles in Poughkeepsie until new equipment was set up at the factory by the middle of 1918, but it never happened. The factory was shut down.

Ad for an American-built Fiat

The rest of the story

Fiat employed more than 30,000 workers and ran its Turin facilities at full capacity throughout World War I, providing ammunition to the Italian armed forces. Despite Italy’s transition to communism, the company would continue to expand and eventually rank among the largest industrial corporations in the world. Agnelli was in charge up until 1945, when the Italian Committee of National Liberation forced him out of the organization. In 1966, the Agnelli family reclaimed ownership of Fiat.

But it was during the post-World War II era that Fiat re-entered the American market, although numbers were modest at best. The company did not make a concerted effort at exporting to the United States until 1957. Whatever sales success the company enjoyed was dissipating by the late 1970s. In 1986, Fiat withdrew from the American market once again.

John Elkann at Ferrari Market Day 2022 close
Chairman John Elkann speaks at the start of the company’s Capital Market Day event.

Yet the company returned to America in 2009, acquiring 20% of Chrysler Corp. after Chrysler declared bankruptcy in 2009. Within two years, Fiat acquired all of Chrysler and became known as Fiat Chrysler Automobiles, until merging with French automaker PSA Group to become Stellantis in 2021. 

The Agnelli family is still very much associated with Fiat through John Elkann, Giovanni Agnelli’s great-great-grandson. Elkann is chairman and CEO of Exor, the Agnelli family’s holding company, which owns stakes in both Ferrari and Stellantis.