“It may require a miracle to pull off the Fiat chief’s latest gambit,” Reuters writes. To get Fiat out of its rut, Sergio Marchionne has a risky plan: “Take his sporty Alfa Romeo brand global with more expensive models and triple its sales volume by 2016 – after years of losses.”
That plan, says Reuters, “represents Fiat’s only real hope of combating a collapse in its home market and breathing new life into idled factories.” What if it turns out as a bust? “Should it fail, and the new cars flop, the company that Italians view as a cornerstone of their economy will have little choice but to put thousands of employees out of work and tip entire communities into turmoil.”
Reuters and analysts are shaking their heads:
- The new Alfas will be built in Italy, where labor and material costs are far higher than in the United States, Asia or Eastern Europe.
- “Get it wrong, or find consumers aren’t interested, and it will be a financial catastrophe,” says Bernstein analyst Max Warburton.
- Barclays Capital: “It’s not the first time we have heard an ambitious volume plan for Alfa, Volumes were supposed to be 400,000 in 2014 rather than the 70,000 that seems likely.”
- LMC senior analyst Joseph Langley: “Alfa is going to have a fight on its hands in luring luxury buyers into its vehicles, Charging a premium and leaning on heritage is not enough in the highly competitive luxury segments, as Cadillac and Lincoln have experienced.”