The new Alfa Romeo Giulia is perhaps FCA’s most important bet after the introduction of the Fiat 500 in 2007 and the acquisition of Chrysler in 2009. After years of speculations and drama from the brand’s fans, this midsize sedan is finally available in Italy and soon in the rest of Europe. The 106 years old Alfa Romeo is supposed to be back in the field as the new Giulia is just the start of a range of new products that will hit the market in the next 4 years. After delaying by two years the brand’s sales target, Sergio Marchionne has repeatedly said that the Giulia is not at the same level of the German premiums but better. Despite the technical, performance and design issues, will this new Italian car find its place in the market?
Easier in America than in Europe
Thanks to the strong presence of FCA in North America, the Giulia is expected to hit this market as a local player. This means that it will make use of the big dealership network and at the same time it will be promoted with a big budget. Alfa Romeo’s image in the US is definitely much better than the one it has in Europe, and this is the main reason why it will be easier for the Giulia to gain clients there. Therefore the big challenge for the Alfa won’t be North America, but Europe, where I’m afraid it won’t be as easy as the big guys from FCA are thinking. At the end in USA, the Giulia will play as local against the foreigners from Audi and BMW.
In Europe the situation is quite different. Even if it plays as local in Italy, it won’t be easy to grab the attention and take sales away from its German rivals. First of all because Europe’s largest D-Premium markets are strongly dominated by Audi, BMW and Mercedes. In 2015, these three brands controlled 96% of German premium D-Segment registrations. UK, the second largest market for this kind of cars, their share was 88%, while in France the percentage was 75%. Italy at fourth place was also a good market for the Germans with 85% of this segment. Belgium outsold Spain as the fifth largest market for the D-Premiums, and there 82% of the registrations corresponded to the Audi A4/A5, BMW 3,4-Series or a Mercedes C-Class. These five markets counted for 73% of Europe’s total D-Premium registrations, which totaled 652.800 units, up by 7% over 2014 results.
Waiting for the SUV
There is also another issue that may play against the Giulia. Italy, where it is supposed to become its largest market in Europe, clearly prefers Station Wagon body types than the traditional sedan. The brand doesn’t plan to introduce the Giulia SW due to lack of interest of American, Chinese and most European consumers. But in Italy things are different and most of the midsize and large segments are dominated by the SW versions. This is also the case of Scandinavian countries and a somehow Germany. This is why I believe that even if it will become a key player in the Italian midsize premium segment, it won’t be able to outsell the Audi A4, which by the way is having an enormous success thanks to the new generation. Outside Italy, it will be a bit tougher as in Germany it will become a niche car, while Northern Europe will barely consider it. The sporty versions of the Giulia will have a better future in the UK and Switzerland, while in France and Spain it could find its way.
The other trend playing against the new Alfa sedan is the segment itself where it will play in. Midsize premium sedans global sales grew by 12% last year and totaled around 1,92 million units. Even if it was a good growth it’s far from the +40% posted by the premium midsize SUVs, whose estimated global sales totaled 1,07 million units. This means that even if the Giulia is joining a bigger segment in terms of volume, it’s definitely more hostile to new comers or everything different from German. It is not the case of the D-SUV segment which doesn’t only grow faster but other brands such as Volvo, Lexus and Land Rover got their important piece of the market. That’s why the new D-SUV from Alfa Romeo (aka Stelvio) is at the end more important for the brand’s plans.