Automotive News Europe - March 2013 - 5

AUTOMOTIVE NEWS EUROPE

COVER STORY

ume, Marchionne says that the company would break even in Europe.
By 2016, about half of the additional
750,000 units built in the company’s
European plants will be sold in Europe
and the other half – dominated by Alfa
Romeo, Maserati and Jeep models – will
be sold in global markets, according to
Marchionne’s planning.
Analysts believe Marchionne’s mission
might be too costly to achieve. “Fiat’s
plan to move upmarket comes with a
big price tag. With up to 18 billion in
capital expenditures to fund over two
years, net debt is unlikely to decline
before 2015, meaning a full buyout for
Chrysler may be off the table for some
time,” Morgan Stanley said.
Barclays Capital also signaled concern
in a recent analyst note. The firm wonders how Fiat can succeed when most
of its rivals “are pursuing the opposite
strategy of trying to localize production to hedge against currency risk.”
The analysts also said: “Competitors
have tried on numerous occasions but
failed to push upscale, with the notable
exception of Audi.”
Another skeptic is Max Warburton of
Bernstein Research. He wrote: “Perhaps
it is possible to grow Maserati, Alfa,
the [Fiat] 500 [range] and Jeep, but it
will take time, capital and success is
obviously far from assured.” Warburton
noted that Marchionne’s strategy results
from pressure from the Italian government to pursue growth when the pragmatic choice would be to rationalize.

Rubik’s Cube
Marchionne knows that the revival
of Alfa and Maserati will take time.
His challenge is to exploit the brands’
potential, which is something that has
eluded him. In my first interview with
Marchionne in October 2005, he shared
this view on Alfa: “The Alfa issue is com-

Alfa wants the 4C to help
boost its brand image..

MARCH 2013

plicated and simple at the same time.
Alfa is a great, world-renowned brand,
but it is selling fewer cars than planned.”
Seven and a half years and two unsuccessful relaunches later, Alfa remains a
Rubik’s Cube that the workaholic CEO
just can’t seem to solve. In 2012, global
sales slipped 27 percent to 101,000,
which was Alfa’s lowest total since 1969.
Last October, Marchionne announced a
new plan for Alfa that calls for the introduction of nine all-new or replacement
models in the next four years to boost
sales to 300,000 by 2016. To reach this
goal the CEO has committed more than
1 billion euros to Alfa for 2012 to 2014.
Barclays analysts have doubts about the
Alfa plan because, as they said in a note
to investors: “It is not the first time we
have heard an ambitious volume plan
for Alfa.” In the past, Marchionne was
even more bullish with his Alfa sales
predictions. He said in April 2010 that
he wanted the brand’s annual sales to
reach 500,000 by 2014.
Just keeping Alfa’s sales steady will
be tough. At the Geneva auto show
this month, Alfa will debut the production version of the 4C sports car, but
the automaker won’t get a significant
sales boost from the coupe because
output will be limited to 2,500 units.
Until 2015, Alfa will offer just two aging
models: the MiTo subcompact and the
Giulietta compact hatchback.
Massimo Vecchio, a financial analyst with
Mediobanca Securities in Milan, said the
new Alfa plan will not succeed because
the competition is too tough. “Even if it
reaches the planned 300,000 units, Alfa
will continue to lose money and remain
a pygmy in the battle of titans between
the German premium brands, which are
already selling well over a 1 million units a
year,” Vecchio said.

Tough target
Marchionne is investing more than 1
billion euros in Maserati to double its
product range to six models from three.
Those additional models are expected
to boost sales eightfold by 2015
compared with last year’s 6,288
units. Maserati is already an
export-oriented brand, with
2,904 units sold last year in the
United States, the brand’s biggest market, and 930 in China,
its No 2 market.
The first model in Maserati’s product of-

Alfa Romeo

Maserati

2013 4C coupe

Quattroporte
Ghibli

2014 RWD large
sedan
4C targa

Levante

2015 Giulia sedan Gran Sport
Giulia wagon coupe
Spider
Mid-sized SUV
2016 Giulietta
MiTo

GranTurismo
GranCabrio

Source: Automotive News Europe research

fensive is the Quattroporte. The Quattroporte went on sale in Europe in February
starting at 149,000 euros in Italy for the
top-of-the-range V-8 model. The car’s U.S.
and Asian rollouts happen this summer.
The company aims to sell from 12,000
to 15,000 Quattroportes this year, which
is more than twice the previous Quattroporte’s 5,088-unit peak in 2007.
Maserati plans to unveil a mid-sized
four-door sedan called the Ghibli at the
Shanghai auto show in April. At about
5000mm long, the Ghibli will compete
with sporty sedan offerings including
the Audi A6, BMW 5 series and Mercedes E class. The Ghibli will start at
about 70,000 euros when it goes on
sale in Europe this summer.
A third model, the Levante SUV, will
be built at Fiat’s Mirafiori plant in Turin
using underpinnings shared with the
Jeep Grand Cherokee. Production will
begin in 2014. Combined volume for the
Quattroporte and Ghibli is about 35,000
units a year at full capacity. The Levante
would account for another 20,000 units.
Marchionne believes that the only thing
that could keep Maserati from reaching
its ambitious goal would be poor product execution, “which is highly unlikely,”
he added.
Mediobanca’s Vecchio agrees: “In
the years to come, Maserati looks to
become a success story. This relaunch
was long overdue.”

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Automotive News Europe - March 2013

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