Alfa Romeo does not achieve its objectives, but it considerably reduces its losses

In 2014, Sergio Marchionne, CEO of FCA and Alfa Romeo, announced the path of the biscione brand in what he himself described as a “rebirth.” His forecasts: Alfa would sell 400,000 units a year by 2018, the year by which it would have launched 8 new models onto the market. The reality is that the results of Alfa Romeo could not be further from those forecasts.

To begin with, Alfa has only launched two models since 2014, the Giulia and the Stelvio, that is, six fewer than promised, and to this day the planned launches have still not been confirmed by the brand.

And things are not going in the direction Marchionne promised, because at this point, although Alfa Romeo still does not disclose production or sales figures for its models, the Federazione Italiana Metalmeccanici indicates that production of the biscione brand amounted to 150,722 units in 2017, a notable jump from 2016 production, when Alfa built 93,117 units (figures that, according to Jato, drop to 118,000 units in 2017 compared with the 71,700 reached in 2016), but which show figures very far from those promised by Marchionne.

Alfa Romeo is far from its objectives. Low sales levels, delays in presenting new models, and the heavy investment the Italian brand is making in developing the new products it is preparing on the new Giorgio platform have meant yet another year in which Alfa Romeo has failed to reach its profit target for 2017. Alfa needs higher sales volume to meet its objectives at the end of each month.

In 2018 it could pay off its debt and generate 4 billion in cash. In any case, despite low sales, the truth is that Alfa Romeo, like the whole FCA group, is turning its economic situation around. According to Marchionne himself, “losses are shrinking,” and that is great news for the brand’s investors, who remain loyal and hopeful about the new direction it has taken.

Alfa needs to increase its sales volume, and to do so it will soon introduce a second crossover model into its range. It also has a plan for the C segment, where the new Giulietta, besides having a platform derived from the one used by both the Giulia and the Stelvio, will probably also add a new hatchback silhouette to its range, as well as new rear-wheel-drive versions.

As for the 4C, it is time for an update and, although no major changes are expected, there is talk of possibly fitting it with the 1.75 Turbo four-cylinder engine producing 240 CV, and even of the possibility of creating a new sports model, the 6C, as possible alternatives.

SUV and sports models, Alfa’s bet to get out of the red

Finally, Alfa is clear that in today’s market it needs SUV-type models to be competitive and to meet both the demand for this type of vehicle and the increasingly tough, fierce competition in these segments. The novelty will come in the form of a new SUV, this time with seven seats, also developed from the Stelvio. It will be a larger model, with a longer wheelbase and three rows of seats in a 2+3+2 configuration. This new model would arrive in 2020. Before that, during this same year 2018, the Stelvio range will add the long-awaited Quadrifoglio variant, powered by a 2.9-litre twin-turbo V6 petrol engine producing 510 CV.

For Marchionne, the difficulties Alfa Romeo faced in 2017 stemmed from the slowdown in sales in the Chinese and North American markets, and from the insufficient sales network Alfa Romeo has, especially compared with other brands in the FCA group, such as Jeep, the current “golden child” of the Italian-American group, which is the brand that has received the most investment of all those making up FCA.

As Marchionne recently stated, “Alfa is still in nursery school, and its revival will take at least until 2022,” that is, four years longer than initially planned in 2014, so we will have to wait until then to find out the real value of Alfa Romeo and its contribution to the FCA Group.

In any case, the FCA Group has been reorganising some of its factories in the USA, which will allow it to soon begin producing sports vehicles and SUVs there, while ending production of sedan-bodied cars that are no longer profitable for it.

Thanks to this reorganisation, the Group has managed to cut its hefty debt considerably during 2017, which will allow FCA to narrow the gap with rivals such as GM and Ford. According to Marchionne, FCA could pay off all its debt in 2018 and generate 4 billion euros in net cash before the end of the year. “The forecast for 2018 is an indication of what this machine can produce. We are going to run our business and we are going to run hard,” Marchionne said. “Now,” he said, “we are fighting our competitors on equal financial terms.” In June, Marchionne, who will step down as chairman of the FCA Group at the beginning of 2019, will present the Group’s future strategy up to 2022 and announce the name of his successor at the head of the group Fiat-Chrysler.