Paolo Fresco said this week he is stepping down as chairman of Fiat and will be replaced by Umberto Agnelli, putting a family member back in charge of the struggling manufacturer.

Paolo Fresco said this week he would step down as chairman of Fiat and be replaced by Umberto Agnelli.

reported that Fresco said he would make the official announcement of his resignation at a board meeting on Friday, where the group planned to discuss how to fight its way out of trouble. The board is due to discuss the group's 2002 results, cost cutting and the development of a new car models by 2005.

Agnelli is the brother of Fiat patriarch Gianni, who died in January. Gianni was chairman for 30 years before retiring. Fresco took over in 1998.

An analyst told that with an Agnelli in charge again, it could lead to the Italian government supporting Fiat. Giulio Brunetta, a fund manager at Alpe Adria Gestioni, said: "The Italian government has always supported Fiat, the Agnelli family knows that and Fiat's ties with the government should strengthen with Umberto in charge."

This is backed by the fact that Umberto Agnelli met prime minister Silvio Berlusconi recently, who said he wanted to discuss the crisis and find ways to keep the country's biggest private sector employer in Italian hands. Fiat has an option to sell Fiat Auto to General Motors from next year.

Original article from Car