Alfa Romeo to Audi, a bad joke

Audi and Alfa 2Once again the Alfa Romeo’s possible sale issue. This time some ‘important’ analysts change the buyer name and add some more companies to the purchase. According to them, Alfa Romeo would be sold to Audi along with Pomigliano plant and maybe Magneti Marelli car component company. This would be part of VW’s plans to expand its business in Italy after the purchase of Ducatti, Italdesign and Lamborghini. Yes, Mr. Piech has repeatedly said he would love Alfa Romeo to be part of his empire but Mr. Marchionne has repeatedly said that it is a key brand for Fiat-Chrysler. Personally I am about 95% sure that under Marchionne’s administration, Fiat won’t sell Alfa Romeo to VW, just because as he says, Alfa Romeo may be generating loses now but it is one of the few promising brands of the group. Selling Alfa Romeo to VW would be like giving Jeep to GM: it is just not feasible. Still, many things can happen and current European situation is an alarm to Fiat to speed up with its plans for the Biscione brand.

Lets say that Fiat sells Alfa Romeo to Audi, just as it was said last week. I try to imagine how it would be positioned among VW Group’s brands. There are 4 main brands, Skoda, Seat, VW and Audi, which are strategically positioned and have their own personality. Seat is the ‘sporty-cheap’ brand with ‘latin roots’. Skoda is the ‘cheaper’ VW. Volkswagen brand is the core brand with the largest range of products and correctly positioned as the ‘quality for all’ brand. Then comes Audi, the entry premium brand (then comes Porsche, Bentley and Lamborghini), as the next step after having a Volkswagen. Based on sales registrations, anyone could say that this positioning has worked. Seat could be the only brand not to produce good results so far, as VW has failed to position it as a sporty brand. Anyhow, VW Group gets ready to occupy pole position as the best-selling car maker in the world. They deserve it after many years of hard work and good luck. But it seems the large quantity of brands they own is not enough for the success equation and Alfa Romeo is a target since many years ago.

How would it be positioned if it becomes part of the German group? between VW brand and Audi? there are no big differences between a Golf and an A3, a Passat and an A4. The other option would be to position Alfa Romeo just one step behind VW brand, but the history of the Italian brand indicates the it has much more pedigree than a Volkswagen (the car of the people). How would they position a Giulietta along with the Leon, Octavia, Golf and A3? Or what would be the future of a Giulia (D-Segment sedan) being part of the same family that produces the popular A4/A5? It has been said that VW wants Alfa Romeo to become its sporty premium brand as a direct rival of BMW, while Audi would focus on Mercedes field. So Germans would count on 2 premium brands with different approaches. It means that Alfa Romeo would be positioned at the same level of Audi, just as Marchionne wants. Personally, I don’t think this scenario would result in something good for the Italian brand, even if VW as a group has a brilliant future.

The premium sporty language of VW Group. Porsche sold 141.075 units in 2012, up 19%. Lamborghini sold only  2.083 units, up a massive 30%. Source: The Economic Times, Left Lane

The premium sporty language of VW Group. Porsche sold 141.075 units in 2012, up 19%. Lamborghini sold only 2.083 units, up a massive 30%. Photo by: Automobile Magazine. Source: The Economic Times, Left Lane

My skepticism is based on what currently happens with Audi, VW brand, Porsche and Lamborghini. Besides the problems with the positioning of the brand, Alfa Romeo would face the similar situation that is having Lamborghini. If you see carefully, Lamborghini has not had the same fast evolution that Porsche has experienced. Of course they have done awesome cars and keep working on the latest technologies in order to beat Ferrari. But when it is about sales forecasts and future projects, Lambo stays far behind Porsche. They are different brands and of course Lamborghini is not supposed to become a volume auto maker. But in terms of show, Porsche is always in the headlines, while Lambo will continue to be the craft sporty brand. I’m afraid the same could happen to Alfa Romeo with Audi. Audi is the pampered child of VW Group and a foreigner wouldn’t change that. It is my belief that Alfa Romeo would have the same future Lamborghini is having now: to become a symbol without big numbers. In total, the Italian brand would become the second one after Audi, with less importance than the one it will have under Fiat administration. If we consider tha fact that this possible deal would include selling Pomigliano plant it just doesn’t make sense. Fiat has just invested 850 million euros for the production of its best-selling car in Europe, and it is certainly not the right plant to get rid off (its best in Italy). Once again, a bad joke.

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29 responses to “Alfa Romeo to Audi, a bad joke

  1. Audi isn’t really a pampered child as much as the profit engine of the VW Group. Still, the conclusion is the same, you wouldn’t want to mess with that success.

    As for the volumes, though, Alfa Romeo is on pace to sell maybe 70K cars this year — that’s HALF of what Porsche will likely sell. So Alfa Romeo is already a brand without big numbers.

    That said, I agree that a sale is unlikely. But if there really were a sale, the Cassino plant (which builds the Giulietta, and which Marchionne has already threatened to close) is a much more likely candidate.

  2. IMHO without Italian ownership Alfa Romeo will cease to be Alfa Romeo. I for one would not buy a German owned Alfa. The affection I have for the brand will die. It’s the same reason why I would never buy a Lambo when there is Ferrari (if I could afford) which is so much superior and is “more Italian” while Lambo has become more Teutonic and inert according to most reviews. Giugiaro was a great designer but I think he’s close to the end of the road judging by some of the truly boring stuff he has come up with for VW. I firmly believe that VW will dilute the unique Italian character of Alfa Romeo however much they wish not to. Just look at how boring all their brands are Skoda, Seat, VW and even Audi. All grey and dreary and wet. Alfa has so much life in it. It sends out sparks and shines and makes you feel uplifted. That uniqueness is because it is Italian. I get a feeling that VW is taking up too many brands and making cars too similar. Look at Bentley. The new cars even look like VWs. That Aristocratic British air is completely gone. The same is likely to happen to Alfa. Anyway the bottom line is that Fiat does not need to sell Alfa. Yes Alfa’s current state is ugly with less than 100k sales and just two models. But what about the 4C and all the new models in the pipeline? It just seems like an April Fool’s joke or a planted rumour.

      • Perhaps, according to hardcore Jeepsters. There’s huge debate going on in the US by the Jeep community who are calling the new Cherokee the “Death of Jeep” because it started out as a FWD platform. I’m going by the evidence of what VWs are and how they’ve managed different brands. Sure they will sell more but is a Pizza from “Pizza Hut” a real Italian pizza? I think not. I would rather drive an Alfa based on a Fiat than an Alfa based on a boring grey VW.

    • Well well explained, the first thing that comes to mind when one thinks of the VW cars is a Chrome Plated Metal or may be a silver blade – All shiny and new, but just has no character in them. Anyways, No of cars sold is never a measure of how good or bad the car is, so one needs to ignore how less cars Alfa sold in the past – but with development dollars coming from the FIAT-Chrysler combine, Alfa’s future is very promising.

  3. It would be the liberation of Alfa Romeo, from people who doesn’t love cars to cars’ enthusiastics.
    VAG resuscitated Lamborghini, bought Giugiaro’s Italdesign and is ready to strenghten commercial’s appeal of Ducati motorbikes.
    And could reopen Alfa Romeo’s historical museum in Arese. Fiat closed it and the sale of his cars was prevented from Italian’s Ministry of Culture.

    • It would not be a liberation at all – it would be the death of Alfa Romeo, followed by the introduction of an impostor whom we might call Audi Romeo. That might be a competent impostor, but an impostor nevertheless.

      • Arguably Fiat is an impostor as well. Since Fiat’s takeover 25 years ago, Alfa Romeo has yet to introduce a new mass-produced RWD car. Instead, Alfa models have been reskinned Fiats, there are only two A-segment hatchbacks for sale, and the company has given up on its racing heritage and its museum.

        Alfa Romeo indeed has a glorious history that deserves better. But it also deserves better than what Fiat has been doing (and not doing).

  4. Leí hace tiempo, en algún blog de habla hispana, que en caso de darse la venta o el traspaso de la marca a VAG, habría colaboración entre Porsche y AR por compartir motores boxer entre otras cosas. Pero no deja de ser mentira.

    Creo que si los dueños de AR no fuesen italianos, ésta perdería sus raíces y el encanto que le queda… Tal cual pasa con Seat.

    P/D: ¿Qué te parece ésta imágen?
    Saludos!

  5. I’ve read in other forums that some believe it could be a rumour planted by VW. Since Fiat is negotiating with banks for the complete take over of Chrysler, the competitor wants to make life hard by making Fiat look weak and vulnerable. This would make borrowing more expensive.

  6. Se non vedo..Non credo!
    The last investment for Alfa is the 4C.Easily convertible in a Maserati.
    Where are the investments?Where are the models?I can’t see them!
    Means: never say never!

    • I’ve long held that the view that Italy does not deserve to have its own automotive industry. The reason for this is that Italians in general don’t seem to appreciate, or even want, the automotive industry they have, but continuously whine about how Fiat is bad, and that Volkswagen is good, and that things would be so much better if only the German saviour took over.

      Italians, it seems, would rather see its domestic car give up on one of its strongest and most valuable brands and sell it to the already mighty and powerful German carmaker – with its vast technological and financial resources, marketing prowess and ability to promise the world to everyone – than to allow its ailing domestic carmaker the opportunity to use the brand to keep a valuable asset and use its potential to try to recover from its current predicament, which is even further handicapped by a long-lasting European financial crisis and all that unfortunately entails in terms of its ability to fund product development.

      Should Alfa Romeo end up in the hands of Volkswagen, I would personally consider it a tragedy. I am, after all, a long-time Alfista. However, at the same time, I would feel a little bit of schadenfreude as Italians wake up to the fact that they no longer have an automotive industry of their own, and that profits on whatever is built from German parts in Italy will all end up in the pockets of Germans.

      • Fiat has already had that opportunity … since 1986. And most of those 27 years have not been crisis or even recession years. 9 of those years were with Marchionne at the helm, and all of them with Agnelli ownership.

        And that’s really my point. No one is complaining about Fiat owning Ferrari, as that brand has been highly successful. But the company has effectively run both Alfa Romeo and Lancia into the ground, and ignored the heritage and history of both of those brands. So I don’t think Fiat particularly “deserves” yet another chance.

        All that said, I agree with others that it’s unlikely that Marchionne will sell Alfa Romeo.

      • @thysi: Not crisis years for the European car market, perhaps, but Fiat itself has gone through numerous crises in that period, both in terms of leadership and financial status (including a near-bankruptcy in 2004). That should be taken into consideration.

        It’s hardly controversial to claim that Fiat has mistreated Alfa (and Lancia) over the years, but it’s only now that Fiat finally seems to be serious about Alfa that cries for the powerful German saviour have become ubiquitous. So – damned if you do, damned if you don’t, it seems.

        Fiat might not “deserve” another chance with Alfa if one solely looks at its past handling of the brand, but it deserves the chance in part because with its Italian technology it’s the only credible owner of the brand in the eyes of Alfisti (non-Alfisti, such as those who want VW to take over, might not care or agree, as they are simply content with whatever Giugiaro-styled Golf clone with a scudetto you throw at them), but also because VW acquiring such an important brand would be the beginning of the end of Italian auto industry.

        The short-sightedness of Italians who would rather have the powerful German juggernaut work its Teutonic “magic” on the legendary Alfa Romeo brand than to allow “the devil they know” to ensure it remains wholly Italian, is a perfect match for the far-sightedness of German VW. If Italians succumb to that temptation, then they will eventually lose their domestic car industry (i.e. it will be owned by Germans and built with German technology, with all profits going back to Wolfsburg, even though some manufacturing will remain), and in my opinion Italians will then get what they deserve, as they got exactly what they bargained for.

  7. Lamborghini didn’t become Lamborghinen wagen.
    So Alfa Romeo italianity will be preserved by Piech and Winterkorn, who are not “bean counters” as Marchionne, but engineers who love cars.

    • Agreed. But they love the german way to make cars. They have german taste.
      How far is a Golf from an Audi A3? Or the Seat or Skoda ones?
      The VW-Alfa Giulietta will be the same car.
      Even an Alfa 4C with a Porsche boxer engine would sound like a german car (sound like an old Beetle, if you know what I mean).
      An Alfa needs to sound, behave and feel like an Alfa.
      VW can only make it look like an Alfa.
      Marchionne is a banker and bean counter.
      But Alfa in VW hands is not the answer, IMHO.

    • De Witte..we have to remember fiat about 10 years ago..and they have to remember every single day the mistakes they did.
      Easy to say(and not wrong) bean counter but i can say to you: Cash is skill.
      He is a good man,he will leave in the right moment.Is not a typicall Italian businessman.

  8. The efficiency of the German’s is a self serving non-sense – The VW used to make extremely poor quality cars and so did the BMW. The VW’s were rusty and used to break down often. However, this is not known to many of today car buyers, especially in the new markets – like in emerging large car markets of Asia. Secondly, the Germans benefitted immensely from the Euro, and as an economist I can tell this with some confidence, and this is reached a cliff. From here on, it is going to work against the Germans. After all there is only so far a good thing can last. If FIAT and the other southern European auto manufacturers can hold out for the next 2-3 years, they will all start gaining market share from the German Car Manufacturers – Not just in Europe, but all over the world.

  9. Fiat is the only southern European manufacturer left, there are no others. Paris is further north than Stuttgart …

  10. I hope and trust that Marchionne would make a U turn and
    would not sell Alfa Romeo. It is unimaginable that Alfa power-
    plants would be messed up with teutonic gadgets. Long live
    Alfa Romeo

  11. Pingback: The first year of ‘Fiat Group’s World’ | Fiat Group's World·

  12. Sergio Marchionne outlined a plan to EXPORT new Alfa Romeo, Maserati and Jeep models from Italy to prevent plants from closing, protect Italian jobs and reduce Fiat’s dependence on Chrysler’s profits in the U.S.

    Marchionne – who turned around Fiat in 2004 and resurrected Chrysler from near death – is aiming to strengthen Fiat by exporting premium brands from Italy to the U.S., Canada and Asia.

    Instead of closing plants in Italy that are running at less than half their potential output, Marchionne wants to launch up to 24 models between 2013 and 2016, with 15 of those to be exported from Italy.

    “This is truly not for the faint-hearted. We have not shied away from a fight going back to 2004,” Marchionne said Tuesday. “I think we have to do it one more time, and I think we have to do it … in a way that provides a permanent solution to (the European) quandary.”

    Fiat’s Revamp to Avoid ‘Carmageddon’:
    Success or failure?

    Critics are skeptical about the plans to move upmarket. FIAT have been trying that for a while with limited success. They doubt whether Alfa Romeo or Maserati can play in the same league as the German brands. To use one of Marchionne’s favorite expressions, he and the company need to act “at the speed of light.”

    Sergio Marchionne has outlined a strategy for Fiat to survive a European “Carmageddon” by focusing on export markets and High-End Models rather than closing plants, as it seeks to break even on the continent by 2016. In response to plummeting demand in its home market, Fiat’s chief executive said the Italian carmaker would revamp its product line and reserve 15 percent of its European capacity for exports – seven new Alfa Romeo and six new Maserati models will be made in Italy for sale outside Europe, including the United States.

    Success!

  13. Fool selling to German. Italy can marketing
    Luxuly car same BMW and Benz. Luxury segment world selling around1.5mill/brand per year.it ‘s easy than Fiat selling compettitive with VW , GM and Toyota.
    Important point is audi no signature same benz , bmw and alfa romeo. German want control luxury segment. They have bmw benz audi and porsche. Italy can marketing luxury segment if still have brand and structure.

  14. Pingback: FCA vs. VW Group: David against Goliath? | Fiat Group's World·

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