Fiat, Volkswagen & the Alfa Romeo Complexity
Fiat s.P.a. is busy tending its American offspring, attempting to ensure that its Chrysler, Jeep, Dodge and Ram brands have a secure footing going forward. That’s a tall order given the financial problems and its dearth of new products in recent years.
Sergio Marchionne, the workaholic brainchild and CEO behind Fiat and Chrysler has managed to gain hold of Chrysler without spending a single Italian lira, a feat made easier when the feds threatened Chrysler with extinction. But, Marchionne has several Italian brands to maintain including niche supercar brands Ferrari and Maserati, Lancia, Alfa Romeo and its namesake, Fiat.
We now know that General Motors had trouble maintaining eight domestic brands, tossing four in a bid to survive. Nine brands can be very difficult to maintain although Fiat’s plans seem to include matching Alfa Romeo to Chrysler and allowing Jeep and Dodge to tap Fiat for platforms and powertrains.
In recent days rumors of ten-brand Volkswagen Group interest in acquiring Alfa Romeo have surfaced with speculation being that VW wants the Italian brand to help it seize the No. 1 global automaker status from Toyota. In recent years as General Motors and Toyota have traded places as 1-2 automakers, Volkswagen sales have surged to where it is now a close third.
At present, Alfa Romeo produces just over 100,000 cars annually. That’s small potatoes, but Marchionne has said that he plans to increase that number five-fold within the next four years. Another tall order, but one he may be able to pull off if he reintroduces the brand to the U.S. market to sell alongside Fiat at select Chrysler Group dealerships.
Analysts are casting doubt that Fiat will be able to propel Alfa Romeo, but these same folks are saying that Volkswagen may be able to reach Marchionne’s goal and on time. Fiat isn’t awash in cash, while Volkswagen has money and plenty of it to burn.
Marchionne’s misgivings show that he is concerned what it would mean if Alfa Romeo left the Fiat Group fold. Chrysler would suddenly not have product available and would have to tap the Fiat brand for some of its models. Supposedly, Chrysler and Alfa Romeo are well down the road to sharing platforms and powertrains, an initiative threatened if VW acquires Alfa Romeo.
Here’s my solution: Fiat should sell Alfa Romeo to Volkswagen, but retain the right to sell the brand stateside as the exclusive distributor. In addition, Alfa Romeo and Chrysler would continue to collaborate on select products, while Volkswagen would tap Chrysler for its next generation Routan and perhaps gain access to some other models.
Does this sound far-fetched? Five years ago, maybe. But, today automakers are working together on various projects in a bid to cut costs and save their own necks. Fiat would get much needed cash, Chrysler would receive new product while Volkswagen would get a shot at automaker immortality by acquiring Alfa Romeo.
Across much of Europe and in some other markets Volkswagen and Fiat are fierce rivals, but that rivalry could be set aside just enough to allow Alfa Romeo to make a clean transfer to the German automaker.
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