(Reuters) – As Italian automaker Fiat SpA (FIA.MI) plots the U.S. relaunch of its sporty Alfa Romeo brand there is plenty riding on its success, from a justification of the Chrysler acquisition to the business reputation of its CEO Sergio Marchionne.
No wonder the company is taking its time to get it right.
Fiat has been planning to re-launch Alfa Romeo in the United States for so long that the wait has become part of the Alfa Romeo myth, on par with its racing prowess, showy styling and distinctive engine squeal.
Just ask Tom Lesko, president of the Alfa Owners of New England Club. In the summer of 2004, Lesko was planning to call the club’s annual Alfa extravaganza “Il Ritorno,” or “The Return.”
But the relaunch was delayed by Marchionne and underwent a fresh delay after Fiat took control of Chrysler in 2009.
“We had to change the name and celebrated the ‘Giulietta Jubilee’ instead,” Lesko recalled, referring to the Nuccio Bertone-designed roadster that first appeared in 1954.
Now Alfa Romeo is back on the U.S. launchpad with the low-slung Maserati-built 4C model, due out in early 2013 and which aims to win business from the BMW Z4, Mercedes Benz SLK and Porsche Boxster.
This time around, Fiat should be better placed because it can tap into the Chrysler dealer network, factories and car platforms as it battles to establish Alfa Romeo as a global brand.
The re-launch is being watched as one of the biggest challenges of the Fiat-Chrysler partnership, one which could be either a crowning success capping the Fiat-Chrysler turnaround or a blot on Marchionne’s track record.
If Marchionne gets it right, Alfa Romeo could become like Audi, which accounted for 40 percent of parent Volkswagen AG’s (VOWG_p.DE) operating profit in the first quarter of 2012 and is also a technology leader for the mass-market VW.
But it he misfires, Fiat-Chrysler’s five-year profit targets could be at risk and Marchionne’s critics will cluck that he is just not a “car guy” with a gut feel for product.
Marchionne has repeatedly said he doesn’t want to re-launch Alfa Romeo in the United States until the product is perfect. In 2010 he talked of “deep soul searching” to get the brand right. And in 2011 he pushed back the Giulia sedan launch to 2014.
FIRST CHALLENGE
Chrysler dealers are itching to get going.
“We are anxious to get started with Alfa Romeo,” said Bill Golling, head of the Golling Chrysler dealership in Bloomfield Hills, Michigan. “But I would prefer the launch, products and marketing be right rather than rushed.”
Led by Fiat-Chrysler Chief Technology Officer Harald Wester, who designed the platform to be used by the upcoming Giulia, Alfa’s first challenge in the United States is to get the right product that will broaden its appeal beyond the faithful who have been waiting for decades to buy a new Alfa.
Younger buyers see the quality problem that beset Fiat and other European mass-market carmakers in the 1980s as ancient history, if they are even aware of them at all, said dealers and enthusiasts alike. Alfa pulled out of the United States in 1995 because of weak sales, the wrong model range and quality issues.
The Giulia sedan and station wagon, for which Fiat-Chrysler’s design chief Lorenzo Ramaciotti is finalizing the styling, will have a press debut in mid-2013 for a launch in early 2014.
The model will be based on Fiat’s “compact wide” platform, a modular base used for the Giulietta and Dodge Dart. Fiat isn’t saying if it will be built in the United States or Italy, though an executive at the Geneva car show said it will likely be U.S.-made.
The larger Alfas will probably be powered by a modified version of Chrysler’s new V6 Pentastar engine. The company hints it will also build Alfas at its factory in China which will be opened by Marchionne on June 28.
“Chinese consumers in the know find Italian fashion irresistible,” said Michael Dunne of Dunne & Co, specializing in Asian car markets. “Alfa Romeo would be smart to find ways to benefit from that special appeal.”
Fiat is also mulling a large E-segment sedan, while in the sports car segment, following on from the 4C will come a new version of the Spider – which still resonates as the car Dustin Hoffman drove in “The Graduate” – and which debuts in 2015, based on a shared platform with Mazda’s Miata MX-5.
The new Spider will fill a huge gap in the Alfa portfolio, a sporting brand which currently has no sportscar. The Brera was discontinued 18 months ago due to poor sales and Alfa has launched only two new models, the Giulietta hatchback and the MiTo compact.
For the Spider, Fiat aims to attract younger buyers who look at an accessibly-priced Scion FR-S or Subaru BRZ and will be priced like the Miata MX-5 ($23,500 to $31,225), aiming for similar volumes (5,674 in 2011, compared with around 3,500 for the BMW Z4 or the Mercedes SLK).
The 4C should be priced in the BMW roadster or Mercedes range ($42,000 to $67,000).
GLOBAL TARGET
Fiat’s five-year plan called for Alfa Romeo sales of 500,000 in 2014 versus 132,400 in Europe in 2011, mostly in Italy but also in Australia, Japan and Argentina. With no European market recovery in sight, a global target of 300,000 in 2014 is more realistic, the company has said. BMW sold 247,907 cars in the United States last year and Audi sold 117,561.
Fiat does not break out Alfa Romeo revenue figures and executives admit they are disappointed by the brand’s performance since Fiat acquired it in 1986. Volkswagen has circled around it for years as a potential acquirer.
The roll-out will be handled by a new executive for Alfa Romeo in North America and cars will sold through the 160-strong Fiat dealer network.
The Fiat group will be hoping to avoid mistakes such as on its 500 mini, where it set an unrealistically high target of 50,000 in the first year (vs 19,769 sold in 2011) and switched ad campaign in mid-course, moving from niche marketing to mass-market with a 2012 Superbowl ad starring sultry dark-eyed model Catrina Menghia.
A new 500 advertisement is due to debut shortly.
Fiat has arguably learned from such missteps. The dealer rollout and new ad push has lifted sales to 4,003 in May 2012 from 1,759 a year ago.
Such progress is promising for Alfa Romeo enthusiasts, but the question remains – can the company successfully compete in the United States?
“Yes, but it can’t happen overnight,” said Dave Platt, who has owned Alfa Romeos including the 1974 Spider and the 1994 Alfa Romeo 164L, as well as a Mini, a Saab and a 1967 Corvette coupe. “Tearing people away from the marques they know and love could be difficult.”
(Editing by David Holmes)
