Marchionne To Reveal Yet Another Relaunch Plan for Alfa Romeo

TTAC Staff
by TTAC Staff
marchionne to reveal yet another relaunch plan for alfa romeo

For the fourth time since 2004 Fiat CEO Sergio Marchionne is reported to have devised a new plan to revive the Alfa Romeo brand, this one focused on premium vehicles made in Italy for export to the world. Alfa hasn’t made a profit in the nine years since Marchionne took the reigns at Fiat.

Marchionne’s latest plan for Alfa will be based on a new rear wheel drive architecture (with all wheel drive variants) that will be developed by a dedicated group of engineers at Maserati in Modena, headed by Philippe Krieff. Krieff reports directly to Harald Wester, Fiat-Chrysler chief technical officer and CEO of Alfa and Maserati. The new platform is seen as needed to compete with BMW and Mercedes-Benz. With sales of 101,000 units last year Alfa Romeo doesn’t really have the kind of volume to support dedicated platforms so the architecture will like be used by Chrysler and Dodge as well. Sources say it could be ultimately used for the Chrysler 300 and Dodge’s Charger and Challenger.

Right now Alfa is hampered by two factors: the brand’s primary market is Europe, where auto sales continue to be soft; and a lack of product. Currently the only models Alfa dealers offer are the MiTo subcompact, Giulietta compact and the 4C sports coupe.

The new architecture will help flesh out the Alfa lineup and be the basis of at least four new models: the Giulia mid-sized sedan and a wagon variant, a large flagship sedan and a mid-sized SUV. The first is set to launch by early 2016 and all will be sold in the United States, where Marchionne has been trying revive the Alfa Romeo brand.

Marchionne has lowered his expectations for Alfa worldwide sales from 500,000 units by 2014, to 400,000 units and last October he said the goal would be “more than 300,000 units.”

Some analysts are skeptical that Marchionne can find the cash to simultaneously regrow Alfa Romeo and buy the 41.%% of Chrysler that it needs to buy to take full control of the Auburn Hills automaker so Fiat can have access to the profits Chrysler is currently generating. Marchionne is in a bit of a Catch-22. He needs Chrysler’s cash to turn around Alfa but Fiat’s current capital structure doesn’t have enough cash to buy the rest of Chrysler to get access to that cash.

One analyst, though, Richard Hilgert, at Morningstar in Chicago, thinks that before trying to buy the rest of Chrysler Marchionne will set up a new capital structure for the Fiat group. Hilgert believes that this would let Marchionne fund the relaunch of Alfa; support new product development for Fiat in Europe; and fund the Chrysler purchase. “I think the company could negotiate a financing package prior to closing on a Chrysler deal with the VEBA [the trade union pension trust that is Chrysler’s minority owner],” Hilgert said.

Maserati sales are booming and Marchionne hopes to reproduce that success with the eventual goal of exporting lots of Alfa Romeos from the group’s currently underutilized Italian plants.

“We will focus on Alfa Romeo and Maserati to access the higher end of what we consider to be a permanently polarized market,” Marchionne said in October, reiterating that Fiat would not close any Italian plants. The combined capacity of the Cassino, Melfi, Mirafiori and Pomigliano plants is more than 1 million units. Last year their combined output dropped by 18 percent to 394,620 units, ~40% of capacity, about half the utilization needed to break even.

Marchionne’s precise plan is a secret until its expected announcement next spring but the Automotive News, based on industry and supplier sources, makes the the following predictions.

Giulia: Originally planned to share the FWD bones of the upcoming redesigned Chrysler 200 and due next year, the Giulia will be switched to the new RWD/AWD architecture and launch at the earliest in late 2015. The new Giulia may be built at the Cassino plant in central Italy.

Large sedan: It was going to be derived from the Maserati Ghibli and launched by 2014 but the Maserati platform was judged to be too expensive to use so it will share the new RWD/AWD platfrom and debut at that same time as the Giulia.

Mid-sized coupe: A BMW 4 Series competitor based on the new architecture.

Large coupe: This would go up against the BMW 6 Series and may share a platform with the next Maserati GranTurismo coupe scheduled for 2016.

Roadster: Due in 2015, Mazda will build a two seat roadster for Alfa based on the next generation MX-5/Miata. It will use an uprated version of Fiat’s 1.4-liter MultiAir turbo direct injected gasoline engine.

4C coupe: European deliveries started in October. Asia will follow in Q1 of 2014 and North America in the second quarter of the year.

4C Spider: Alfa plans a version of the 4C with a removable carbon fiber roof, expected to be revealed in Geneva next March.

Compact crossover: Everyone today has to have a compact crossover. Alfa’s will be derived from the replacement for the Jeep Compass and Patriot.

Mid-sized SUV: Alfa had been considering building an Alfa variant of the new Jeep Cherokee at Jeep’s Toledo, Ohio plant but the latest reports say that it might be switched to the new RWD/AWD architecture and built in Cassino.

Large SUV: This would be based on the Maserati Levante premium large SUV that is due in early 2015 and will be built at Fiat’s Mirafiori plant in Turin.

MiTo: Alfa canceled plans for a five-door variant of the three-door MiTo. The MiTo is only sold in Europe and with the weak market there, a business case couldn’t be made for the five-door.

Giulietta: Due for a complete redesign in 2016, Alfa’s best-selling model was just face-lifted and given new electronic features.

Join the conversation
4 of 34 comments
  • Tassos Chinese owned Vollvo-Geely must have the best PR department of all automakers. A TINY maker with only 0.5-0.8% market share in the US, it is in the news every day.I have lost count how many different models Volvo has, and it is shocking how FEW of each miserable one it sells in the US market.Approximately, it sells as many units (TOTAL) as is the total number of loser models it offers.
  • ToolGuy Seems pretty reasonable to me. (Sorry)
  • Luke42 When I moved from Virginia to Illinois, the lack of vehicle safety inspections was a big deal to me. I thought it would be a big change.However, nobody drives around in an unsafe car when they have the money to get their car fixed and driving safely.Also, Virginia's inspection regimine only meant that a car was safe to drive one day a year.Having lived with and without automotive safety inspections, my confusion is that they don't really matter that much.What does matter is preventing poverty in your state, and Illinois' generally pro-union political climate does more for automotive safety (by ensuring fair wages for tradespeople) than ticketing poor people for not having enough money to maintain their cars.
  • ToolGuy When you are pulled over for speeding, whether you are given a ticket or not should depend on how attractive you are.Source: My sister 😉
  • Kcflyer What Toyota needs is a true full size body on frame suv to compete with the Expedition and Suburban and their badge engineered brethren. The new sequoia and LX are too compromised in capacity by their off road capabilities that most buyers will never use.