Alfa Romeo needs products. With only 2 models available and a third coming, the brand must enlarge its offer if it wants to survive. In 2012 they barely sold 100.000 units, which is nothing, and is close to what Saab sold just before closing definitely. Marchionne has talked about a future D-Sedan and SW (probably called Giulia), an E-Sedan, a C-SUV, and a roadster coming from Japan. All these products should arrive in the coming 3 years to allow Alfa Romeo to become global and increase its sales up to 300.000 units by 2016. European crisis made Fiat guys to change their goal of reaching 500.000 by that year, which is not a bad idea, as it has more credibility. With the right marketing mix, excellent quality standards and the best positioning, Alfa Romeo will be able to sell around 50.000 units in USA in its first years, and catch some market share from Germans in Europe. Then China will come. But what if another product if added to the equation of success?
In the last 5 years European premium brands (the 3 Germans plus Volvo) have evolved to become more reachable to customers. They did not make discounts on their fancy cars, but they are developing smaller cars in segments where 10 years ago was unacceptable to do it. That’s how we can find the small Audi A1, or the BMW 1-Series and Mercedes A-Class. Based on their sale registrations the conclusion is that the formula has worked for them. Small does not mean cheap and they know it. It is why Audi, BMW and Mercedes did not stop: Audi launched the C-SUV Q3 to compete with BMW X1, while Mercedes just presented the CLA, a C-Sedan, and prepares the GLA, a C-SUV. Volvo is doing good with its nice V40. This right approach has allowed premium brands to increase their share in European market and take advantage of current crisis to offset mainstream brands. Fiat feels it perfectly as its sales are being negatively affected by the expansion of VW in one side, and the rising of premiums in its traditional segments. However it counts on something its rivals from France and Germany (Ford and Opel) don’t have: a premium brand.
Alfa Romeo is a premium brand with so many problems and opportunities. If it wants to catch a bit of the premium segment it will need great products to tell customers that it is a real option to Germans. But for doing this, it must work faster and bring new ideas before its competitors. The Giulia, the E-Sedan and the C-SUV will be for sure nice products, but they will arrive late, when the Germans are already positioned. What if Alfa thinks of something that Germans don’t offer? in the last 2 years a new kind of SUV has been under development by several mainstream brands: the smallest one, the B-SUV. It is still in its initial phase in terms of sales volume, but it will be have an important position in all car markets. Last year 340.000 small SUV were sold in Europe, 90.000 in Brazil, 70.000 in USA and 43.000 in Argentina. They performed better than total market in Brazil, Argentina and Italy, while they had a positive growth in USA. Of course, when comparing these results to the ones gotten by larger SUVs, the numbers are still small. But there is plenty of room for them in the market as consumers are moving from regular passenger cars (B and C segments) to SUV. That’s why Dacia is doing so well with its low-cost Duster, Nissan plays an important role with the original Juke, and Mini has had interesting results with its Countryman.
But at the end there isn’t any premium small SUV in the market yet. And that’s where Alfa Romeo could play its role. If clients are buying premium, they are looking for SUVs, and there are no premium small SUVs, then there could be any possibility for Alfa Romeo to led the way. Fiat and Jeep are now working in their small SUV, but their products will be common products to compete with the Juke, Countryman and the future 2008, Captur, Ecosport, and Taigun. Alfa Romeo could make use of the same platform to develop its own small SUV and create the subsegment. I made some renderings of a possible Alfa Romeo ‘Xtrada’, my idea of how it could look. The name is based on the word ‘strada’, for highway in Italian but changing the ‘S’ for ‘X’ to associate it to a SUV, just as BMW and Volvo do it. Fiat already uses this name, Strada, for its small Brazilian pickup, but as they are completely different products and their markets would be different, then there wouldn’t be any big deal with it. The positioning of this hypothetical model should be one of the most important things to consider. The Xtrada should be the option for those looking for a city SUV with premium features and a very sporty shape. Those willing to pay more to get more in the form of a small SUV. Then Fiat Group would have the complete offer in this segment: the Fiat 500X, the chic product; the Jeep B-SUV, the classical one; and the Alfa Xtrada, the sporty-premium one. I leave you the renderings.