Alfa Romeo’s future

With the Fiat-Chrysler five year plan being announced today, Alfa Romeo’s CEO Harald Wester revealed his plan to save the Italian company. His methodology, adopting a plan similar to Fiat-Chrysler, consists of a long term plan that consists in launching a new line of cars that will be a direct competitor to the german luxury brands.

The new programs to achieve these goals are led by two Ferrari engineers, and counts with a group of 600 other engineers. Alfa will count with their own facilities and staff, a similar procedure that BMW used to develop the new i3 and i8.

Alfa stated that their new models would include a successor to the Giulietta, a crossover, and a large rear-drive front-engined Spider. In their new models they plan to come up with innovative solutions and designs that make the brand distinctive from its competitors; this would include experimenting with materials to make light cars and new smaller motors to get a better fuel efficiency.

The cost of the project will be of about €5 billion, and it will be a great challenge for the team to finish by 2018. Furthermore, Alfa is planning to enter a market with strong competitors that already have a solid reputation, while Alfa has some poor reputation due to its absence in the market. Wester says that they are aiming to sell 40% of what BMW or Audi sell, something that might be too optimistic given the reasons above.

Is this attempt to rescue the firm going to end up killing it given the risky investment and the situation in the market?

How will Alfa try to establish in the two largest markets of the US and Asia where it has no dealerships at the moment?

Will a failure of this project end up pulling the whole Fiat-Chrysler group with it?

2 comments to Alfa Romeo’s future

  • Bill Cosgrove

    You describe the Alfa Romeo plan and it’s attendant risks very well. As I am sure you are now beginning to appreciate this is not an industry for the timid and the stakes in this strategy are enormous.

  • Peter Wittwer

    Harald Wester’s plan does not make much sense. Based off the success of Mulally’s “One Ford,” you’d think if a car brand was struggling they would look within and strengthen their main brand before they started to expand into a whole new brand of luxury vehicles. Wester is investing billions in a whole new line of cars, that he has no clue if it will be successful. Alfa does not have the same worldwide prestige as brands like BMW or Audi, which will make it difficult for Alfa to sell any competitive luxury vehicle. Also, most automakers agree Asia represents the future of the automobile market. Without any dealerships in Asia, Alfa Romeo severely limits its future sales. Also, Alfa Romeo does not have any dealerships in the U.S., which is not good at all. The U.S. represents a high income country that could potentially represent a lot of sales and a big market for luxury cars. Without a footing in the U.S. or Asia, Alfa Romeo really puts a cap on how successful their luxury cars can be. They are limiting themselves to the European car market and in order to have a game changer that will save the company, Alfa Romeo needs a very successful car with a competitive model and competitive pricing that can be marketed worldwide.

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