Little more than a year ago, the Alfa Romeo brand seemed poised to become one of the stars in the Fiat Chrysler Automobiles portfolio. At a well-attended event in Milan in June 2018, former FCA Chief Executive Sergio Marchionne positioned the Italian marque as one of four brands that would dominate the company’s future sales, along with Jeep, Ram and Maserati.
But, just hours after Fiat Chrysler confirmed plans to merge with France’s PSA, the late Marchionne’s successor, Michael Manley, sounded a much more sour note, raising concerns about Alfa’s future, particularly in the U.S. market where it has struggled to gain traction.
“I’ve not been happy with the performance of Alfa Romeo,” said Manley, who succeeded Marchionne in July 2018 after the former CEO’s unexpected death. “While I fundamentally believe in the brand, we must make sure any investments we make generate appropriate returns.”
As part of the five-year plan announced in Milan last year, Alfa was set to see a significant expansion in its line-up which, at the time, consisted solely of the midsize Giulia sport sedan, the Stelvio SUV and, in some markets, the older Giulietta sedan. The expanded portfolio was to include a new sports car, among other things, and several SUVs, while there also were set to be two high-end halo cars:
· An all-new Alfa Romeo 8C adopting a carbon fiber body and platform. It was slated to deliver more than 700 horsepower through a hybrid drivetrain pairing a mid-mounted twin-turbo gas engine and an electric motor driving the front axle. Expected 0 to 100 kmh time? Under 3 seconds; and
· A new Alfa GTV reviving one of the brand’s legendary nameplates. The four-passenger model would make over 600 horsepower using an electrically boosted gas engine. Power would be delivered to all four wheels and the GTV will feature torque vectoring.
But Manley, during his Thursday morning earnings teleconference, said that, “in the near term, the new portfolio for the brand is significantly scaled back with a corresponding reduction in capital spending.”
Equally significant, Manley also stressed that Fiat Chrysler plans to “refocus the portfolio of actions for the brand to segments and geographies where we have successfully competed.”
That could spell trouble for the brand’s future in the U.S., at least one veteran analyst, speaking on background, cautiously wondering if Alfa might vanish from the market – again. Along with a number of slow-selling European brands, the Italian marque left the States in the early 1990s. It tested the waters for a return in 2008 with the debut of the limited-run 8C Competizione supercar but didn’t make a serious comeback attempt until 2015 with the launch of the little 4C roadster.
That was followed by the Giulia and then the Stelvio, Alfa’s first SUV, and initially perked U.S. demand which grew from 12,031 in 2017 to 23,800 a year later. But demand has been falling off sharply in 2019, American dealers selling just 9,037 Alfas during the first half of the year, compared with 12,265 during the same period in 2018.
“They have given it a good try,” said Carla Bailo, CEO of the Center for Automotive Research in Ann Arbor, Michigan. “But they just can’t keep doing the same thing if they can’t return a profit.”
The Giulietta will go away as part of the rationalized product line-up, Manley revealed Thursday. And, beyond the bigger Giulia and Stelvio, Alfa will now get only two more products, a compact SUV and an even smaller utility vehicle.
“I believe these actions will allow the brand to return to profitability,” he said during his morning call. But he quickly added that, “While there are no product actions beyond what you see here, obviously I wouldn’t rule out that possibility in the future depending upon the performance.”
While none of the industry observers who spoke to TheDetroitBureau.com – mostly on background – saw the Alfa brand going away, CAR’s Bailo stressed that all bets are off when it comes to what products and brands will survive “after the merger with PSA.”
She expects the combined company – which will see PSA CEO Carlos Tavares retain the chief executive role – to give a serious look at its entire portfolio. That could put virtually everything at risk, including the flagship Fiat and Chrysler brands that were left with relatively few products to market, anyway, under Marchionne’s five-year plan.
But Alfa will have to build up some momentum or it, too, could face a very uncertain future.