Fiat/Chrysler CEO Sergio Marchionne seems ever more committed to the idea of bringing the Alfa Romeo brand to the United States, telling Automotive News [sub]:
I’m a lot more confident now that Alfa Romeo will reconstitute a product offering that is acceptable globally, and more in particular in the United States and Canada. There is a strong likelihood that the brand will be back here within the next 24 months
Needless to say, this is the kind of news that gets automotive enthusiasts all hot and bothered: a European brand known for its small hatches and dynamic brio coming to a US market that’s not known for offering either. And though more choice for consumers is typically a good thing, Marchionne’s motivations for bringing Alfa to the US are less than entirely admirable. As with so many decisions made in the auto industry, keeping enthusiasts happy comes at the expense of smart business choices.
Alfa Romeo may have beaten many of the reliability and quality concerns that scuttled its last US-market campaign, but the brand isn’t out of the woods by a long shot. The European market has not been kind to Alfa in recent years, as the brand has consistently lost between €200m and €400m in each of the last ten years, bleeding sales and market share every step of the way. Jeremy Clarkson might wax lyrical about the romantic appeal of Alfa’s cars, but European buyers have largely shrugged their shoulders and bought Skodas.
So steep has been the decline in the numbers of committed Alfisti that Marchionne has been flirting with shutting down Alfa altogether. First the brand was put in “strategic review,”
then Fiat bundled
it up with Maserati and Abarth into a new “sales channel.” New product development has been frozen until the new CEO of Alfa/Abarth/Maserati comes up with a strategy for the marginal brands, and the firm’s latest product has suffered from delays caused at least in part by awkwardness surrounding the initial decision to name it Milano
after a city where Alfa no longer employs a significant number of workers.
And so we’re left with an awkward proposition: Alfa is not coming to conquer the states with the wind at its back, but rather bringing the brand stateside is seen as a cure for its troubles. Given the awkwardness that lingered after Alfa’s last departure from this market, this is a troubling proposition. Moreover, it highlights a questionable propensity in Marchionne’s leadership: when things aren’t working, take them global. Fiat’s Chrysler hook-up was an act of desperation that Fiat entered into when it couldn’t make an Opel deal work because, according to Marchionne’s analysis, Fiat would not be able to survive the maturation of the Chinese auto industry without the economies of scale available at 5m annual units of production. The same approach is being taken with Alfa: if it doesn’t work, find a way to build more and hope things work out for the best. Fiat’s recently-announced Russian joint venture cements the impression: Marchionne will go anywhere and partner with anyone in pursuit of volume.
In fairness, volume and economies of scale are fundamental to the business. Marchionne’s metric of volume per architecture is a highly rational approach to an industry in which distraction is a constant threat. But, as Automotive News
[sub] reports, Marchionne already plans to build 700k units per year in the US by 2012 based on the new “Compact-Wide” platform that underpins the new Alfa Giuletta (neé Milano). And the plan is to brand those as seven different Chrysler Group nameplates. Given this in-house competition from brand-engineered platform-mates, Alfa has a tough row to hoe in rebuilding brand equity in the US.
And if Alfa had only to build brand loyalty on the strength of new Fiat platforms, there might be some room here for optimism. But one volume-boosting gambit begets others, and bringing Alfa to the US isn’t just about improving Fiat’s return on its new platform. A long-rumored RWD sedan based on Chrysler’s LY (300C, Charger) platform to be built in Brampton appears to be back on, with plans for a 2013 rollout. Fiat is also said to be considering other Alfa products based on Chrysler’s existing platforms. In short, Alfa may well be distinguished from Dodge by only styling, badges and some suspension/ECU tweaks. The enthusiasts are expecting traditional Italian recipes, but they’re far more likely to get the automotive equivalent the Olive Garden.
And then there’s the crucial issue of where these Alfas would be sold. Mercury’s questionable brand strategy
may be driven by the needs of the dealer body, but Alfa’s US strategy will be top-down as there are no Alfa dealers left in the US. And its fighting its way into a Chrysler distribution network that’s already loaded down with brands. In addition to Dodge, Chrysler and Jeep, Fiat-Chrysler has spun Ram into its own brand, and a limited number of dealers will also host separate showrooms for the Fiat-branded 500 and 500 Abarth. Will Alfas appear as a limited lineup, destined for these Italian-themed urban sub-dealerships? Or will it attempt to offer a more complete lineup and run the risk of competing with the new, sportier, Fiat-based Dodge lineup? None of these options are without major challenges, just one of which being the problem of fitting all those brand logos on the side of dealerships.
None of which will convince enthusiasts and frustrated American Alfisti that bringing Fiat’s sporting brand stateside is a bad idea. Especially once speculation begins to coalesce around the possibilities of diesel drivetrains (not gonna happen) and another round of achingly beautiful junior-Maserati sportscars like the 8C (don’t hold your breath). But the automobile is big business, and a half-assed entry into the US market for all the wrong reasons won’t do Fiat/Chrysler any good. Nor will the new-wave Alfisti be particularly happy if the experiment once again ends with ignominious retreat. If the plan were to bring a strong brand with a successful product line into a market that showed signs of buying premium small hatches in serious volume (the well-established MINI brand saw volume slide beneath 50k units last year), We’d be the first to welcome the bella macchinas. Cynical and poorly thought-through ploys to boost platform volume and rescue dying brands just don’t inspire the same kind of enthusiasm.