SAIC Motor and MG : Setting a precedent for FGA’s ailing Alfa Romeo brand?
Alfa Romeo and MG – two of the Automotive Industry’s most historic and iconic, but often troubled, sporting marques – have much in common at the moment. The two brands have probably the most active and dedicated global Owners’ Clubs networks of any OEMs and, while MG enthusiasts have just been celebrating the marque’s 85th Anniversary this year, Alfisti will be celebrating Alfa Romeo’s 100th Anniversary in 2010.
Alfa Romeo and MG have both chosen to mark their respective anniversaries with the introduction of an important new model which will play a major role in determining whether or not each marque survives and thrives long enough to enjoy similar celebrations in the future. SAIC Motor launched the MG6 at last month’s Guangzhou Auto Show and Alfa Romeo has just confirmed that the new Alfa Romeo Giulietta (formerly referred to as the Milano) will be launched at the Geneva Motor Show next March.
However, while a spokesman for MG Motor UK Limited has said that the MG6 ‘marks the start of one of the most exciting periods in the 85 year history of the iconic MG brand’ and recently appointed Sales and Marketing Director, Guy Jones, described the launch as ‘a milestone day’ for the marque, the comments made by Fiat Group Automobiles S.p.A. (FGA) CEO, Sergio Marchionne, about the current performance of Alfa Romeo which coincided with the Giulietta’s official World Preview last week, give cause for rather less optimism about Alfa Romeo’s future.
Marchionne was talking to Automotive News Europe’s Luca Ciferri and his two subsequent articles ‘Money-losing Alfa could face product freeze’ and ‘Fiat mulls putting Chrysler name on Lancia’ made for a thought-provoking read. Automotive Analysts and Alfisti alike had been wondering why there had been little or no mention of Alfa Romeo during the marathon 8 hour presentation of Chrysler Group LLC’s Business Plan for 2010 – 2014 on the 4th November, 2009 but the reason for that omission has now become clear. Marchionne believes that Alfa Romeo has undergone too many reinventions and told Ciferri that: ‘We need to stop doing it. You cannot be a newborn Christian every four years. It’s the same religion, eventually you need to own a religion and carry it to conclusion.’
FGA’s CEO has therefore initiated a Stategic Review of Alfa Romeo and, according to the first of Luca Ciferri’s articles, the two options for the brand are:-
1) replacing the 159 with a D-segment range and the 166 with an E-segment range built in North America on Chrysler platforms but unique to and sold by Alfa Romeo on a global basis or
2) freezing investment in the brand after the launch of the 147-replacing Giulietta next March. The MiTo and Giulietta would be Alfa Romeo’s only up to date models but the 159, Brera and Spider would remain in production for a time.
The D-segment and E-segment models referred to in 1) above would presumably utilise the latest, heavily modified, version of Chrysler’s rear wheel drive LX platform which was originally based upon the Mercedes-Benz W210 platform and has now, apparently, been re-designated as the LY platform. The LY platform reportedly underpinned the Opel/Vauxhall Insignia-sized Chrysler 200C EV Concept revealed at the North American International Auto Show in Detroit last January and a longer version will underpin the new E-segment MY11 Chrysler 300C.
However, Sergio Marchionne went on record at the presentation of Chrysler Group LLC’s Business Plan last month as saying: ‘I won’t even tell you the amount of money that the [next-generation] 300 platform costs. You’d be shocked out of your pants, but it’s done and life will move on.’ Marchionne wants to build twenty one different Chrysler and FGA models on only seven basic vehicle platforms by 2014 whereas today the two companies have a total of eleven platforms. The average number of models per platform will increase from 1.9 to 3.0 and the number of vehicles sold per platform will rise from 125,000 to 305,000 so the savings on engineering and development costs should be significant but, even so, Alfa Romeo’s Design and Engineering Teams are likely to have much cost-cutting work to do in order to make a commercially viable business case for the option in 1) above.
Edd Ellison of the usually well-informed, UK-based, ITALIASPEED.com website has consistently reported that the replacements for the Alfa Romeo 159, Chrysler Sebring and Dodge Avenger were to be based on an extended wheelbase version of Fiat’s Compact (formerly C-Evo) platform dubbed the D-Evo platform (1) but that plan no longer appears to be under consideration and so, by obliging Alfa Romeo to use the more expensive Chrysler LY platform for the 159 and 166 replacements, Marchionne seems to be loading the dice against Alfa Romeo’s medium to long-term survival.
Another factor militating against the viablility of the option in 1) above may be the emerging European trend towards a consolidation of the D and E-segments as evinced by a comparison between the dimensions of the E-segment MY10 BMW 5-Series and the D-segment Opel/Vauxhall Insignia – the key dimensions of the two models are all pretty much an exact match for each other. Alfa Romeo may not, therefore, need to replace the 159 and 166 with two models but just one…
Sergio Marchionne’s announcement of the Strategic Review at Alfa Romeo has, of course, prompted much debate about the marque’s future on websites such as AlfaOwner.com. One AlfaOwner.com Forum member noted that many of the points made by Gavin Green in his recent ‘Saab: 1947-2009?’ Blog on Car Online were equally applicable to Alfa Romeo and several others have suggested that FGA should consider a third option: dispose of the IPRs to the Alfa Romeo brand and product range to an OEM with the desire and resources to establish the marque on a truly global basis.
Intriguingly, Automotive News Europe’s Luca Ciferri has now come to that conclusion himself – in his latest online ‘Inside Europe’ column, Ciferri observes that ‘cancelling new products would kill Alfa in just a few years, so Marchionne would do better to sell the brand before it goes into an agonising decline’ and then suggests that ‘maybe a cash-rich, globally ambitious Chinese carmaker might like to have a brand like Alfa.’
AROnline therefore wonders whether that ‘Chinese solution’ to Marchionne’s Alfa Romeo problem was discussed on an informal basis during Luca Ciferri’s recent interview with FGA’s CEO and reckons that there must, at least, now be a chance that Alfa Romeo will be sold to one of the leading Chinese OEMs. Ciferri does not specify which of the major Chinese OEMs might be interested in acquiring the Alfa Romeo marque but we believe that Guangzhou Automobile Group Co. Ltd. (GAC) may well be at the head of the queue.
FGA’s parent company, Fiat S.p.A., and GAC have recently won approval from China’s National Development and Reform Commission for the JV which was signed in Rome on the 6th July, 2009 (2). Indeed, according to a report in the China Daily, construction work on the two companies’ new JV facility at Changsha, the capital of Hunan Province, began with a groundbreaking ceremony on the 26th November, 2009.
However, in addition to GAC’s JV with Fiat, the company has JVs with Honda and Toyota and also announced plans to build a full range of own-brand passenger cars back in 2007. The first such model will reportedly be based upon the discontinued Alfa Romeo 166 platform which FGA sold to GAC in September, 2008 (3) and should hit the Chinese market in 2010.
Pre-production prototypes of the new E-segment model have recently been spotted on test in China and bear a close resemblance to GAC’s striking VIP Lounge Concept car. Ash Sutcliffe of the China Car Times website reports that one of the two prototypes caught on camera had an ‘A’ badge on the back and reckons that GAC may be planning to launch the car under the company’s Acumen brand but we think that the Alfa Romeo marque would be a rather neat fit with the ‘sports-business’ niche which the new car will be targeting…
SAIC Motor may have acquired the MG brand as a consequence of the merger with FGA’s original Chinese JV partner, Nanjing Automobile Corporation, but soon realised that the company’s new own-brand products would be more likely to succeed in the global marketplace if they wore the badge of an established European marque like MG rather than that of a new and unknown brand such as Roewe. Acumen may be better suited to the American and European markets than Roewe but Alfa Romeo has so much more charisma and heritage. SAIC Motor and MG might just be setting a precedent for GAC to follow with Alfa Romeo…
AROnline’s readers may have also drawn another parallel between Alfa Romeo and MG or, more accurately, Rover Group Limited. Sergio Marchionne’s recent remarks reminded observers such as Autocar.co.uk’s Steve Cropley of those made by BMW Group’s then CEO, Bernd Pitschesreider, during the launch of the Rover 75 at the British Motor Show in 1998. However, in Alfa Romeo’s case, FGA clearly intends to complete the Strategic Review and make a final decision about the marque’s future before the Official Launch of the new Giulietta at next March’s Geneva Motor Show so that car might yet have a chance to ‘rise above a bad launch.’
A final point: Alfa Romeo UK and MG Motor UK’s Dealer Networks are currently of a similar size – Alfa Romeo has 49 Dealers and MG has 40 Dealers. However, while rumours suggest that MG Motor UK has plans to expand the Dealer Network to 100 outlets in readiness for next year’s UK launch of the MG6, Sergio Marchionne’s comments can only generate serious concern about the continuing viability of the Alfa Romeo franchise within an already radically reduced Dealer Network. Interestingly, Christopher Nicoll, the Alfa Romeo UK Managing Director responsible for that restructuring of the Dealer Network, resigned some months ago – his successor, Fiat Group Automobiles UK Ltd’s Managing Director Andrew Humberstone, may well now have a real problem filling any remaining open points.
Alfisti and MG enthusiasts alike will have to wait and see what the future holds for the two famous marques but 2010 may well prove to be a pivotal year in the respective fortunes of both Alfa Romeo and MG…
[Editor’s Notes: (1) See the following ITALIASPEED.com articles: ‘Fiat architecture plans for Chrysler quickly taking shape’ 14th June, 2009, ‘Chrysler Group 2010 – 2014 Business Plan: Chrysler’ and ‘Chrysler Group 2010 – 2014 Business Plan: Dodge’ 5th November, 2009 for more information. (2) See the following just-auto.com article: ‘ITALY: Fiat inks car and engine JV with Guangzhou’ 6th July, 2009 for more information. (3) See the following ITALIASPEED.com article: ‘Guangzhou confirms platform talks with Fiat’ 1st October, 2008 for more information.]