Sergio Marchionne rethinks FCA’s Alfa Romeo strategy as China’s new car sales cool.
When announced, it was immediately recognized as a tremendously ambitious plan for the Alfa Romeo brand when Fiat Chrysler boss Sergio Marchionne stated last year that global sales for the Italian marque were projected to reach 400,000 units worldwide in 2018. Representing nearly a six-fold sales increase over 2014, that figure was based on a $5.5 billion product investment, yielding as many as eight new models.
Much has changed since Marchionne made his eyebrow-raising prediction. The most significant change has to do with China, a market that has cooled and one FCA had expected would represent a significant part of Alfa’s growth. With China no longer the dependable market for new products it once was, the automaker will concentrate on strengthening the brand’s appeal in two other key markets — the United States and in Europe reports the Detroit Free Press.
New Products for Alfa Romeo
Nevertheless, Alfa Romeo will still get its new products. For instance, the Giulia sedan introduced in Italy last summer should reach our shores sometime next year. Specifically, it is an entry-level model with a high-performance variant, designed to take on the BMW 3 Series and the M3.
Additional products expected include a midsize coupe, at least two sports car, a large sedan, and a pair of utility vehicles. As a result, the release of those models over a three- to four-year period will now take five or six years to complete. Although the sequence of product rollouts and the timetable for those releases will be adjusted, we don’t yet know how it will unfold. An announcement will wait until January, according to Automotive News.
China Slowdown and a Market Peak
Certainly, the change in schedule is a disappointment for Marchionne and a bit of an embarrassment. At the same time, those plans followed earlier projections that were equally ambitious, but were established when key consumer markets were red hot. With China’s ascendancy slowing down and as the US market approaches its peak, an honest review of the Alfa Romeo itinerary is warranted.
The Alfa reworking comes as FCA must also manage expectations for its other brands. For example, the Fiat brand hasn’t met sales forecasts, although the 500X crossover has shown promise. Fiat’s gradual product expansion comes as consumers switch to crossovers, essentially leaving the 500 and 500L behind.
Jeep Tops 1 Million Sales Worldwide
The brightest mark in the FCA brand portfolio is Jeep. The 4×4 brand topped one million global sales last year as the automaker continues to bring Jeep goodness to more markets. Notably, October 2015 US sales for FCA rose 15 percent on the strength of a 33 percent increase for Jeep. Indeed, top to bottom every Jeep model is contributing; the all-new Renegade is now outselling the Compass.
As FCA adjusts its Alfa Romeo plans, it may once again look at the time schedule for its other brands. This past June, Reuters reported that FCA was delaying the release of “…at least a dozen current or new vehicles in North America.” Those models include the high volume Ram 1500 and the Jeep Wrangler as well as new models such as the Jeep Grand Wagoneer.
Most of the delays can be measured by the number of months, although a few models are scheduled to arrive a full year later than originally planned. However, pulling forward with the production schedule means leaning on suppliers to step up their game. Such pressure could backfire for a family of brands that are already at or near the bottom for quality.