Italian carmaker Fiat, still mourning the death of the last senior member of its founding Agnelli family, was plunged into turmoil yesterday when its chief executive resigned unexpectedly moments after a new chairman was named.

Italy's biggest industrial group announced Mr Giuseppe Morchio's decision to stand down as chief executive minutes after the group appointed the head of its sports car Ferrari unit, Mr Luca di Montezemolo, as new chairman.

The chairman's post had become vacant after Mr Umberto Agnelli (69) died of cancer.

Mr Morchio took over as chief executive in 2003 with sweeping powers to tackle the deepest financial crisis in Fiat's 105-year history. His shock resignation, the day after Mr Agnelli was buried, leaves a managerial void at the top of Italy's biggest private-sector employer.

Mr Morchio had replaced about half of Fiat's top managers with hand-picked outsiders, and his departure was likely to stun investors, who had given his turnaround plan cautious approval.

Fiat said Mr John Elkann, the 28-year-old grandson of former Fiat boss Mr Gianni Agnelli, had been named vice-chairman.

Questions had been raised about the role at Fiat of its founding family after the loss of the two most senior Agnellis in little more than a year. Umberto's older brother, Gianni, died of cancer in early 2003.

Mr Montezemolo, 56, is credited with building Ferrari into a sporting and financial champion. The Turin-based industrial group owns the Fiat, Ferrari, Maserati, Lancia and Alfa Romeo marques, and also makes trucks and tractors.