The third of Top Gear’s “Ten Commandments for Proper Petrolheads” reads as follows: “Thou shalt own an Alfa Romeo.” Messrs. Clarkson, Hammond and May reckon that, “to be a bona fide petrolhead at some point you have to own, or have owned an Alfa Romeo.” Indeed, when Jeremy Clarkson reviewed the Alfa Romeo 4C for Sunday Times Driving back in October 2013, he affirmed: “Alfa Romeo is still my favourite car maker. I still believe you can’t really call yourself a petrolhead until you’ve owned one.”
AROnline’s regular readers will need no reminding about the outcome of Mr. Clarkson’s last review of an MG6 Magnette 1.9 DTi-Tech – suffice to say, he clearly does not have the same affection for MG as he has for Alfa Romeo! However, irrespective of whether Mr. Clarkson’s conclusions on that occasion were justified or not, what he failed to mention was that the two marques still, arguably, generate more passionate debate amongst petrolheads the world over than many others which have achieved more sustainable sales success – in short, many petrolheads still really care about the fate of both Alfa Romeo and MG.
Last year marked MG’s 90th Anniversary while this year will be Alfa Romeo’s 105th Anniversary – both marques share a notable Motor Racing heritage but success on track has not always been matched on the showroom floor. Alfa Romeo and MG have undergone numerous changes of ownership and that might, in part, explain why they have each had a somewhat chequered history to date – that they have both survived may just be down to the emotional connection which successive Alfa Romeo and MG models have made with their owners.
However, the parallels between Alfa Romeo and MG extend beyond their oft problematic pasts to the present. Alfa Romeo’s European sales totalled 58,976 units which equated to a market share of 0.46 per cent last year while SAIC Motor’s combined sales of MGs and Roewes in China stood at 180,018 units – that was down 22 per cent on 2013’s total of 230,020. Here, in the UK, where 2,476,435 cars were registered in 2014 – a ten-year high – Alfa Romeo’s market share fell to 0.22 per cent while MG Motor UK sold 2,326 cars, which increased the company’s market share to 0.10 per cent. That said, Alfa Romeo UK’s 55-strong Dealer Network’s cause will not have been aided by having just two ageing volume models – the B-segment MiTo and C-segment Giulietta – and the low-volume 4C sports car to sell. MG Motor UK’s 57-strong Dealer Network would probably identify with that issue – currently, they have only the B-segment MG3 and C/D-segment MG6 to tempt buyers into their showrooms.
A two-model portfolio does not alone provide either the OEM or the Dealer Network concerned with a sustainable, long-term business model – for evidence of that, look no further than some of the comments made by Mitch Millett, the former Dealer Principal of Manchester-based Alfa Romeo dealership Bauer Millett & Co. Limited, when his 40-year-old, family-run company went into Administration shortly before Christmas last year. Alfa Romeo and MG clearly need to generate more volume to survive in an increasingly competitive global marketplace and that surely means expanding their respective product portfolios in order to increase sales and market share in their existing markets and to return to former markets – namely, in Alfa Romeo’s case, America and, in MG’s case, Europe and then, possibly, America.
What, then, have Fiat Chrysler Automobiles N.V. (FCA) and SAIC Motor Corporation Limited (SAIC Motor) revealed about their respective marques’ Future Product Programmes? Well, that seems to be where the parallels between Alfa Romeo and MG come to an end.
The comprehensive Investor Presentation delivered by the Head of Alfa Romeo and Maserati, Harald Wester, during FCA’s Investor Day at Chrysler World Headquarters, Auburn Hills, Michigan last May was, in fact, the fourth turnaround plan for Alfa Romeo to be announced since FCA CEO, Sergio Marchionne, was first appointed (as CEO of what was then Fiat S.p.A.) back in June, 2004 – that was largely down to the five years needed to overcome a number of significant financial and legal hurdles before FCA could be incorporated and listed on the Borsa Italiana and New York Stock Exchange last October.
However, the savvy Sergio might just have seen the previous three versions of his turnaround plan for Alfa Romeo as a way of maintaining the brand’s equity whilst starved of new products – the risk of both Alfisti and the global Automotive Industry media losing faith in Alfa Romeo outweighed any loss of personal credibility – or loss of face – on his part.
Marchionne, in short, aims to move Alfa Romeo into the heart of the prestige space predominantly occupied by Audi, BMW and Mercedes-Benz and has committed FCA to a massive £4 billion (€5 billion) investment in a new all/rear-wheel-drive architecture derived from the Maserati Ghibli’s platform – reportedly developed under the codename Project Giorgio, this new architecture will underpin every new Alfa Romeo model including the replacement for the current front-wheel-drive, C-segment Giulietta.
The Investor Presentation mentioned above gave brief details of eight new models which featured in Alfa Romeo’s Future Product Programme. Automotive News Europe’s Editor, Luca Ciferri, neatly summarised those details in an article published shortly after the Investor Day last May but, in a piece published last September, he cited “sources with direct knowledge of the plans” as suggesting that “the timing and complete description of… Alfa’s new range are still open.”
More recently still, Harald Wester disclosed some additional information about his plans for Alfa Romeo to CAR Magazine’s European Editor, Georg Kacher, in this interview. The long-overdue replacement for the Alfa Romeo 159 – which will, according to Kacher, be called the Giulia – seems set to be revealed on 24 June 2015, Alfa Romeo’s 105th Birthday. The D-segment saloon will be aimed squarely at the likes of the Audi A4, BMW 3 Series and Mercedes-Benz C-Class as well as Jaguar’s new XE and will, Kacher claims, now be the first of nine new Alfa Romeos – three saloons/hatchbacks/estates, three crossovers/SUVs and three sports cars (including a V6-engined version of the 4C) – due for launch between this summer and 2018.
Meanwhile, as Reuters’ Bernie Woodall reported back in May, “critics of the Alfa rejuvenation plan, including investors, industry analysts and bankers, cite concerns [over] distribution, the challenge of bringing eight new models to market in such a short time frame and the intense competition of the market.” Indeed, many of those individuals continue to be sceptical about whether Alfa Romeo, which, after all, only recorded global sales of 74,000 cars in 2013, will achieve Marchionne’s ambitious target of 400,000 units in 2018.
That said, as Autocar’s Associate Editor, Hilton Holloway, observed, perhaps the most surprising feature of Harald Wester’s Investor Presentation last May was his “unashamed exposure of the company’s past mistakes.” Wester was right to adopt such a candid approach, though – the mistakes of the past should be used to inform the success of the future and, if Marchionne, Wester and their colleagues in the latter’s skunk works can put those lessons into practice, then maybe Alfa Romeo will, at last, be turned around successfully…
The open and transparent nature of FCA’s Investor Presentation on Alfa Romeo last May and Harald Wester’s subsequent willingness to discuss the marque’s Future Product Programme with one of Europe’s most highly-regarded Automotive Industry journalists contrasts markedly with what seems, at least from a UK perspective, to be SAIC Motor’s continuing reluctance to share any meaningful information about the company’s plans for the MG marque with the English-speaking Automotive Industry media… The only information about MG’s Future Product Programme available to Automotive Industry media professionals and MG enthusiasts around the world emerges onto the Internet via a few English language, China-based websites such as Automotive News China and CarNewsChina or the occasional Google translations of articles about SAIC Motor/MG on Chinese language websites.
An example of the latter is an article published by the Chinese business website JRJ.com last July which, when translated by Google, suggested that SAIC Motor’s then recently appointed Chairman, Chen Hong, intended to establish MG as an “independent” brand and that MG was “likely to introduce an international team” to “operate” the brand. However, the English version of the headline – SAIC Chairman Chen Hong took office another gun Roewe and MG separate operations – does call into question the accuracy of Google’s translation…
AROnline did wonder whether, given the timing, the still unexplained resignation of Briton and former Austin Rover Group man, Simon Thomas, as Global Head of Marketing for Volkswagen Group AG and of Volkswagen Passenger Cars a few weeks later as well as MG Motor UK’s subsequent £28 million acquisition of 47-48 Piccadilly and 1-3 Albany Courtyard in London’s Mayfair for use as a showroom and office headquarters might be a part of Mr. Chen’s strategy but no official confirmation of what those plans mean for the future of MG has been forthcoming to date. Indeed, although images of the MG5-based MG GT, the facelifted MG6 and the forthcoming MG GS SUV, which will debut at Auto Shanghai this April, have been circulating on the Internet for some time, not even those in MG’s UK Dealer Network are able to say whether and, if so, when each of those models will reach their showrooms.
Admittedly, MG Motor UK’s then PR Manager, Laura Biss, quit last November and Sales and Marketing Director, Guy Jones, left at the end of January so the company must be in the process of re-structuring the Sales and Marketing Department and, indeed, has now advertised for a Press Officer, but the concern here is that, while any re-structuring is underway both in the UK and, seemingly, at SAIC Motor/MG in China as well, MG’s brand equity is gradually slipping away – a decade has now passed since MG Rover Group went into administration and there is already a generation of younger car buyers to whom MG means little or nothing at all. Moreover, and worryingly, some of the younger followers of the BMC>MG story are now wondering whether SAIC Motor’s strategy for MG is one of preparing to fail – at least, in so far as any long-term design, engineering or manufacturing presence in the UK is concerned.
All that, though, begs this question: what creates brand equity? Well, for a start, intelligent use of a company’s heritage and products to build an emotional bond between the customers and the brand. However, as with all relationships, the bond between brand and customer must be based on respect and trust. Chinese corporate philosophy traditionally places considerable emphasis on the need to earn respect and trust – in any culture, that process only occurs over time but, once gained, both respect and trust can be lost overnight…
MG may still be SAIC Motor’s adopted ‘English Infant’ (if the Google translation of the JRJ.com article mentioned above is accurate, the Chairman, Chen Hong, has only recently described MG as “a baby in his hands”) but, perhaps, the company now needs to extend that parent-child analogy to the wider MG family and take some positive steps to earn their respect and trust. Indeed, a failure to do so would mean that the company was in danger of squandering 90 years’ worth of brand equity – on a rational level, that surely defies commercial logic and, on an emotional level, such a wasted opportunity would be nothing short of a tragedy.
Carlos Tavares, the Portugese-born former Chief Operating Officer of Renault S.A., who was appointed as Chairman of PSA Peugeot Citroën (PSA) in March last year, would, one suspects, agree with that assessment. Tavares produced his operational framework for the company’s turnaround just 15 days later – one of the standout features of his ‘Back in the Race’ presentation was the decision to accelerate the implementation of his predecessor Philippe Varin’s plan to make Citroën’s DS line an autonomous premium brand.
However, notwithstanding that PSA has opted to link the 60th Anniversary of the original Citroën DS to the introduction of the now standalone DS marque’s first model, the DS 5, at next week’s Geneva Motor Show, Tavares is clearly under no illusions that achieving his objectives for DS might take between 20 and 30 years – he admitted as much when giving this interview to CAR Magazine’s Editor, Phil McNamara, last November. Just imagine, then, what he would probably give for DS to have 90 years’ worth of brand equity…
Interestingly, just last week, Peter Schwarzenbauer, the Chairman of Rolls-Royce Motor Cars Limited, and his colleague, the Chief Executive, Torsten Müller-Ötvös, published this ‘Open Letter… on the subject of a new Rolls-Royce.’ The pair concluded by saying: “This new journey begins now. We will take our time in developing and perfecting this new concept in luxury. We will include our customers, enthusiasts and media along the way and will keep you informed of our progress.” Just imagine the positive impact which a similar statement of intent from their opposite numbers at SAIC Motor about the future of MG would almost certainly have on that famous marque’s credibility – that should also go a long way to preventing any further erosion of MG’s brand equity…
A final point: with FCA’s Sergio Marchionne so clearly marching Alfa Romeo into the global automotive market’s prestige space, SAIC Motor has the potential to position MG as an affordable alternative to Alfa Romeo in the value sector.
Are there any AROnline readers willing to bet on the third of Top Gear’s “Ten Commandments for Proper Petrolheads” being amended to read ‘Thou shalt own an Alfa Romeo and an MG” in, say, ten years’ time?
[Editor’s Note: MG Motor UK now appears to have withdrawn the advertisement for the Press Officer vacancy which had been at the link in the seventeenth paragraph of the above article. Hopefully, then, that may mean that an appointment might just be in the offing…]
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