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Alfa's big new car plan has been delayed
Investment for Alfa's big revival has been postponed. Paul Horrell reports
Well, whoda thunk it? Alfa Romeo has decided to postpone the full investment for its ambitious revival plan. It says we won’t now see the full range until 2020. You might remember that in 2014 we were promised an eight-car lineup by 2018.
The news was given by Fiat Chrysler Automobiles boss Sergio Marchionne at the announcement of the Group’s 2015 financial results.
Generally, those Group profits were pretty buoyant. North American sales were strong. Jeep is going gangbusters, having almost quadrupled sales since 2009. The Group even made some money in Europe, helped by the Renegade and 500X.
So why postpone investment in Alfa?
Two excuses, mainly. Chinese growth is stalling, and Japan and Australia have fallen. Alfa’s management had previously said that Asia would be a big opportunity for the relaunch. Also, the Group reckons that long-term cheap petrol in America will push sales of SUVs, so it’s putting more money into Jeep.
In other words, Marchionne has decided that playing the long game – investing in making the Alfa brand a major player again – isn’t as important as short-term profits. Jeep and big Dodges will make more money sooner, so they get the investment at the expense of Alfa.
This sad song is stuck on repeat. In 2006 Marchionne said he’d revive Alfa and quickly double its sales (instead it’s now half where it was then). In 2009, he told me it wasn’t worth investing in Alfa because there would be no payback during a financial crisis. At the same time BMW, Mercedes and Audi were investing without a let-up, and it has repaid them handsomely.
In 2010, having merged with Chrysler, he said that by 2014 Alfa’s sales would increase fivefold. He’d do it by using the Giulietta, an upsized version of same for the Giulia, and some Jeep platforms for SUVs. Then he cancelled that. Next he decided to go rear-drive and use Chrysler platforms for the Giulia and up. Then that plan too was stalled.
Then in 2014 the grandest plan of all. Again now he’s back-pedalling, saying there is another call on the money.
But it’s not just the failure of Asian markets and success of Jeep that have caused this latest delay. It’s obvious that there was naive over-optimism in the planning of the whole Alfa renaissance.
The Giulia was shown as a static exhibit last summer, but it won’t be on sale until more than a year after that. Even the press test drives have been postponed several months. Plainly the engineering isn’t complete.
The company also gave one reason for the delay as the “need to guarantee proper global distribution network execution”. In other words, they haven’t got the dealers sorted. Sorry, but is anyone surprised by that?
Marchionne pleaded this week that the “commitment to overall brand and product strategy remains in place” for Alfa. But he added that “the launch cadence is re-paced”. Which is a euphemism for delaying the new cars.
In 2014 the plan was for a Giulia and estate, a bigger saloon, two crossovers, a Giulietta replacement and a coupe/convertible, all by mid 2018. Since then another crossover has been added (related to the Maserati), making three in all, while the Giulia estate has been deleted.
Now the development and manufacturing investment has been trimmed for the next two years. As a result the rate of introduction has slipped, so we won’t see them all until “mid-2020”.
TopGear has always loved Alfa Romeo. But the past decade has been a series of over-promises and under-deliveries. That’s why we were sceptical when the 2014 plan was first announced.
To be fair, Marchionne has a great record of setting goals and reaching them. His turnaround of Chrysler-Dodge-Jeep-Ram has been nothing short of spectacular. He has just about held the line on Fiat in Europe. But Alfa is his blind spot.
He just doesn’t seem to grasp that Alfa Romeo will need years – decades – of intensive nurturing before it delivers the payback he wants. That’s how it was with Audi. That’s how it is with Jaguar. Premium nameplates can eventually make big money. But they are a long-term investment, not a quick buck for shareholders.