Marchionne Presents Yet Another Turnaround Plan
Another day, another turnaround strategy from Sergio Marchionne. The plan, which won’t be revealed until April, reportedly includes a rear-wheel drive architecture as a key element, with enough flexibility to be used in everything from Alfa to Dodge vehicles.
Although Alfa Romeo is said to be a key factor in Fiat’s overall future growth, it currently fields just two small hatchbacks and the low volume 4C sports car. Most of its sales happen in Europe, where the new car market is weak. Alfa badly needs this new architecture to flesh out its product line with larger sedans, station wagons and SUVs, but nothing is expected to bear fruit until 2016 at the earliest.
Previous plans have called for Alfa to sell 500,000 units by 2014, a goal that was established in 2010. Since then, there has been a constant lowering of volume targets while the date itself is pushed back further and further into the future. The return of Alfa Romeo to America is a bit of a running joke amongst car enthusiasts, but at this point, it’s a matter of global survival for the brand, and each delay only makes the situation increasingly precarious.
More by Derek Kreindler
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A lot of good discussion here. Also the usual doom and gloomers making their appearance. Seems to happen whenever the subject provides opportunities to be critical of Fiat/Chrysler/Sergio. Considering the poor financial conditions in Europe and the contentious issues with the VEBA, this type of update to the plans should not be unexpected. I'm looking forward to the announcements. Sergio seems to be very serious about the Alfa revival. Considering what he's done with the 4C and Maserati, he may take Alfa to heights it's never experienced. I can't wait. Go for it Sergio! Screw the critics.
@Lorenzo: Well I've seen cars in Murilee's Junkyard Finds series that advertise being front wheel drive on the dash, and back in the 80s just about every four wheel drive vehicle was available with loud and proud 4x4 or 4WD decals on the rocker panels and/or rear fenders.
The best option for Fiat is to sell Alfa or find a partner to invest in it. JLR would be the best option. Give Tata 50% of Alfa and agree to share factories. In return Alfa get access to all of Jaguars future and current technology. Alfa then focuses on premium hot hatch backs in the smaller to mid size segments and Jaguar focuses on the mid to large cars. Alfa makes the smaller roadsters. Jaguar the bigger ones. Alfa and Jaguar share dealers and hey presto Alfa is successful. Fiat can then either sell or retain its stake. Jaguar taps the smaller car market through Alfa without having to downsize and grabs a share of the profits. Everyone's happy. Fiat and Chrysler then focus on their core business.
So if Fiat can't afford to buy those shares and invest in new models they need to find the cash or investment money from elsewhere. Here's the problem for Fiat consider the billions Tata is investing in JLR to grow the company. 2.5 billions dollars is currently JLRs annual borrowing for additional new models and factories. And they plan to maintain this spend for another 5 years. I'm not saying JLR aren't doing this profitably, they are but it's expensive to add new models to a line up even when the existing models are all self funding. For Alfa to compete this is the kind of spend you need and the bigger problem is that they aren't even making money on the existing cars. Fiat are in a much worse position than Ford were when they sold JLR. Ford could have found the cash for JLR. Fiat can't do it like that. So they realistically have 3 options: Sell Alfa Find an investment partner Close Alfa