Posts tagged: Alfa Romeo

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.

Fiat, Chrysler Draw Ever Closer

Sergio Marchionne, chief executive for Fiat and Chrysler, has outlined his five-year plan for both companies. Marchionne’s initiative is far-reaching, one that will separate the sprawling Fiat empire into two companies while drawing Chrysler ever closer to Fiat.

Two Fiats

The Financial Times reported on Wednesday that Fiat will be separated into two companies – Fiat for autos and Fiat Industrial, the latter comprised of its non-automotive divisions including Iveco trucks and Case New Holland, a producer of construction and farm equipment.

Marchionne’s ambitious five-year plan includes the blending of Fiat and Chrysler operations. The Fiat brand will be introduced to the North American market later this year when the popular Fiat 500 goes on sale (see photos following). In 2012, the Alfa Romeo brand will return with as many as five models available come 2014.

Lancia Revival

Marchionne also announced that Lancia would be revived, getting eight new models including six that it will share with Chrysler Group brands. Lancia will not be sold in North America while Fiat’s other two brands, Ferrari and Maserati, will continue to sell its cars in the United States and Canada.

Fiat controls 20 percent of Chrysler with that number expected to increase to 35 percent eventually. Fiat and Chrysler operations will remain separate although Marchionne hasn’t ruled out that the two automakers may eventually merge.

Big Changes

Marchionne announced that 51 new products will be introduced over the next five years, two-thirds of that total will be Fiat products and one-third Chrysler Group models. If all goes according to plan, the combined automotive operations will produce 6 million cars annually by 2014, exceeding the 5.5 million Marchionne said in December 2008 that automakers need to produce in order to be profitable.

Both Fiat and Chrysler have reported net losses for the first quarter of 2010, but each is expected to be profitable for the year. For Chrysler, that improvement is in stark contrast to more recent years when the automaker lost billions and eventually declared bankruptcy and becoming a ward of Fiat.

Fiat 500
Fiat 500
Fiat 500
Fiat 500
Fiat 500
Fiat 500
Fiat 500

Photos courtesy of Fiat Group Automobiles S.p.A.

Fiat Models To Power Chrysler Products

It probably won’t be much of a surprise to Chrysler followers, but come next Wednesday we’re going to learn just what sort of direction the beleaguered automaker will take when it announces its product plans going forward. With Fiat steering the ship, a number of new models based on Italian technology will underpin upcoming Chrysler and Dodge vehicles, particularly its cars.

Dodge Ram

Fiat 500The announcement is coming as some worry that Chrysler needs to move quickly as customers abandon the automaker in favor of competing brands such as Ford, Hyundai, Kia and Volkswagen. Chrysler has already said that for all intents and purposes its Dodge Ram line will be separated from other Dodge products which also means that the Dodge Grand Caravan and other Dodge models will go away. In their place will be a handful of new models resting on Fiat platforms.

Fiat has indicated that the Fiat 500 (pictured), its popular world car, will be sold through select Chrysler dealers beginning in 2011. The Italian automaker has also said that its Alfa Romeo line will be introduced to the US market, perhaps no later than 2012. Fiat owns a 20% stake in Chrysler, but the company has no plans to pour cash into the struggling automaker, just product lines.

UAW Ownership

Chrysler filed for bankruptcy late this past spring, emerging weeks later with most of its toxic assets left behind. With federal government assistance, Chrysler broke free from its previous parent, Cerberus Capital Management, LP and is now owned by the United Auto Workers (UAW), the US and Canadian federal governments and Fiat. The UAW owns the lion’s share of what is now legally called Chrysler Group, LLC at 55%. Over time, Fiat will eventually increase its ownership to 35% and, if successful, gain controlling interest over Chrysler.

A number of Dodge models will go away over the next few years including its midsize sedan, the Avenger, the Nitro SUV and the compact Caliber. Several Jeep models will be dropped including the bulky Commander, as well as the Compass and Patriot. Chrysler will say good-bye to the aged PT Cruiser and its midsize Sebring sedan. New models based on Fiat platforms will replace some of the vehicles being retired, but not all.

Fiat 500

Fiat plans to build its 500 model in Mexico beginning in 2011, importing that car to the United States. Several other Fiat derived model lines will be built at other factories in North America and sold as Chrysler, Jeep and Dodge vehicles. We’ll have to wait until the Chrysler Group makes its announcement next week to see the outline of those plans.