Alfa Romeo Has A New Corporate Plan *Sigh*

I remember back around 2009 or so, I wrote on Saabs United about the fact that Saab had about as many concept cars in 30 years as they had actual production models in 60+ years. We’re not quite at that stage with Alfa Romeo’s re-hashed business plans yet, but we’re not far off.

The suits at Fiat held a corporate information day yesterday, which is why your automotive news services were flooded with stories about Chrysler, Dodge, Fiat, Alfa, etc, etc.

Here’s the Alfa presentation, slightly abbreviated but with a few remarks thrown in where appropriate.

If you’re an Alfa Romeo cynic, save yourself some time and go read Sniff Petrol’s account of the new plan 🙂 .

If you’re an Alfa tragic like me, read on…..

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The show starts with a history lesson, recalling Alfa Romeo’s racing successes over the years in some of the world’s most prestigious races. They even wheel out old Enzo for a quote about their ancient greatness.

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Now, if you’re looking closely, you’ll see that the world class races that Alfa Romeo won were mostly back around 80 years ago, in the 1930’s. There was some success in the later parts of the 20th Century, but that was in your more domestic type race series. That’s not to diminish the achievement because it takes a hell of a team effort to win a race in DTM, for example, but the big-name victories mostly came in the 1930’s.

It’s fine to wheel out Enzo, but be aware that he actually took what Alfa Romeo were doing in the 1930’s and made it something meaningful for the 1950’s, 60’s and beyond. That’s the full scope of the challenge here. That’s what you’re trying to catch up to.

No-one’s denying Alfa Romeo’s sporting heart or DNA, but the claim looks a little thin on the ground when there’s barely anyone still alive that was even born when these big races were won, let alone anyone who can remember such success.

By Alfa’s own admission, the success they had on the track didn’t translate to too much success on the showroom floor:

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You might want to store some of those figures away for later reference. The key figure is around 180,000 sales per year, which is the best they’ve done, achieved back in the 1980’s when the Alfetta and Alfasud were kings.

So why didn’t Alfa Romeo turn success on the track into continued growth in the sales charts?

Reliability and rust might be two valid answers, but Alfa Romeo (and Fiat themselves) put it down to Fiat’s mismanagement. Fiat took control of Alfa Romeo in 1987 but Alfa themselves started the rot a few years earlier. The slideshow offered this example as the beginning of the end of Alfa:

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The Alfa Romeo Arna was Alfa’s own decision, but Fiat followed up with a dedication to front-wheel drive and compromised chassis’ that lent little credence to Alfa’s sporting pretensions.

Alfa styling was rarely in doubt, but the mechanicals could rarely cash the cheques the bodies were writing.

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And so we get into recognising where things went wrong and the all-important planning for the future. What are the most important attributes of Alfa Romeo’s sporting DNA and what do they have to do to regain the reverence in which they once revelled?

Naturally, Alfa Romeo has some answers:

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Personally, I’m not too sure about those. Most of them read like modern performance car attributes, but I’m not sure they’re historically accurate when it comes to Alfa Romeo. Alfas had small output engines but clever designs that were lightweight and fun to throw around. I’m not sure that power-to-weight was a priority way back when, though low weight definitely enabled good tossability.

Maybe I’m being too pedantic.

These next two slides are interesting. Alfa Romeo is deliberately benchmarking the Germans and making solid claims about their intention to make cars with minimal, if any, interference from their parent company. This is a bold claim, one that doesn’t reconcile too well with modern car company operations. That’s especially so when the car company is headed by Sergio Marchionne, a man who’s claimed in the past that there will eventually be just six car companies in the world. Small and independent isn’t his thing.

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Their solution?

It’s basically down to setting up an all-new Alfa Romeo – an engineering skunkworks that can focus solely on fulfilling the mission statement above and turn those intentions into Italian made cars that fulfil a grand Alfa Romeo vision.

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Now, anyone who loves Alfa Romeo should love this idea. Many have been under-satisfied by Alfa’s modern efforts, which were good front-wheel drive cars with sporty pretensions, but were NOT sports cars like Alfas of old.

The BIG question – and there isn’t a font large enough to do that justice – is whether or not Alfa Romeo can pull this off. They haven’t done it under Fiat for the last 30 years. Why should anyone believe they can do it now? Again, Sniff Petrol provides your scepticism 🙂

Well, here’s how they plan to do it.

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I’m not a fan of this next slide. To claim that you’re the only maker in your intended segment that’s focused on the driver – when your intended segment includes a lot of driver-focused cars – is a slightly lame attempt at kidding yourself. It might be good for the motivation, but I don’t think it’s realistic and when you’re spending 5 billion-with-a-B Euros on R&D and production, you want to be realistic.

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So here’s the intended product cadence, albeit in a chart that’s not to scale. The last column looks like an onslaught of vehicle releases all at the same time, but that last column is actually a three-year stretch.

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Can anyone help me with the “UV” bit in the chart above? Urban vehicle? Utility vehicle? Underworld Vehicle? Underwater Vehicle!!??

This next slide is a little bit tantalising, showing proposed engine outputs for their petrol and diesel engines.

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And here’s where things get really – really – difficult to believe. I draw your attention back to the historical sales chart earlier in the show, where Alfa had maxed out at around 180,000 cars per year on average during the 1980’s.

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Let me set this out for you…..

This is a car company re-start in a very competitive category, selling high-priced cars that quite likely won’t be very practical. And it’s going to result in your company more-than-doubling your best ever sales per year??? And all this will happen before the end of a decade that we’re nearly half way through already?

Sniff Petrol.

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The rest of the slides contain some fluff to get your mind off that projected sales figure…..

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As you can see, there’s plenty to hope for if you’re an Alfa Romeo fan. A return to Alfa Romeo’s true sporting heart would be a wonderful thing. The motor vehicles they could make under the engineering part of this plan are enough to put some genuine steam in a man’s strides.

But you do have to wonder.

When the same plan includes claims of an autonomously run Alfa Romeo, when it claims sales of 400,000 vehicles a year and talks about unique powertrain solutions that can take a decade or more to develop fuelling those increased sales within the next 4 years……

This doesn’t seem like the most realistic plan.

I applaud the boldness. As a Saab fan, it reminds of Saab’s determination to re-cast itself after the GM days. Saab ran out of money and couldn’t see that plan through. Alfa are still part of the Fiat family, but will Fiat provide the resources to see this plan through?

I love Alfa Romeo. I drove a wonderful little Alfa Sprint to work this morning and it made me smile the whole time.

I’ll be cheering for them with all of my sporting heart, but I have a hard time seeing this plan turn into a reality.

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11 Comments

  1. At least Alfa Romeo has a plan for the future. I think Lancia is less fortunate. But the whole problem of Fiat can be seen when you look at the current product line.

    Alfa has long killed the last of the cars based on the Saab-Fiat Luxury platform, although they did not have any replacement by then. Fiat is still living from the small-size platform codeveloped with GM at the time where GM owned 10% of Fiat.

    I still don’t like Mr. Marchionne, but to buy Saab in 2009/10 would have been strategically important for the Fiat group, and could have been a better solution for Saab, but it is too easy to say something like this afterwards.

  2. You would think they would learn. The 156 and 147 were huge successes (by Alfa/Volvo/Saab/Jaguar standards) because they built attractive cars that were credible alternatives to the ‘usual suspects’. Audi is a huge player and achieved this on cars with a significant VW parts input and no RWD.

    The business plan should read build a TT, employ some good dealers and then build some good cars. it is NOT rocket science.

  3. Interesting plans, but colour me skeptic…

    Even if I’m not that of a motor-head, even I get giddy just hearing the names Alfa Romeo and Lancia. For me they are linked to the Italian automotive history in the same way Porsche is the to German one or Aston Martin and Jaguar is to the British one. Even if there has been some big mistakes and the cars not always lived up to the myth, you can’t but have a warm feeling about them and what they tried to do. You can forgive a lot of mistakes but there is always “tomorrow”. I guess Saab fans all over the world looked at Saab somewhat the same way. So in theory I should get excited about these plans The problem is not so much what they think Alfa Romeo can be, but more the way they plan to execute it.

    Big conglomerates trying to come clean and admit mistakes about goals, philosophies, brands, or products will probably always leave a bad taste – especially when the apologies comes in the form of a slide show. I wonder how many of those producing those slides knows more about the true hart of the brand than an average Alfa tragic like Swade. For how many of them is this a really important thing in their life, something they are willing to risk a lot for? How many of them have a true history in Alfa Romeo?

    Setting up skunk work is probably fine – *if* all you want to do is to cut through the red tape and execute the best possible thing according to a set of rules within a designated time frame without any thought of appearance, public recognition, or the fact that there needs to be something the day after tomorrow. Worked well for items like the U2 or the A-12/SR-71. I don’t know if the execution of the first Saab Turbo can be labelled as such, but even if so it was just one piece of a puzzle. I’m very skeptical that the theory will work when relaunching an iconic brand. The main problem is well described by Swade: “…the claim looks a little thin on the ground when there’s barely anyone still alive that was even born when these big races were won, let alone anyone who can remember such success”. If the DNA is lost, then it will just be another Lexus project – the end result could very well be working automobiles but there will certainly not be any DNA around to satisfy Alfa fans.

    Also, stating a sales goal is probably not the best way to show an understanding of what a quirky Italian car brand is all about. And eight models in the next four years? How about focus instead of trying to satisfy every market segment a la Audi or BMW?

    The bright side is that the brand will probably still be around for a couple of years. The outlook for Lancia is not that positive… Such a waste of heritage, but maybe that is the new reality in the automotive industry.

  4. You know my “Alfa is dead” mantra, but funny enough, I am not that sceptic, for the following reasons.
    -5 billion is quite a bit of money. In particular when you have access to fully operational assembly plants, lots of base technology and engines etc.
    -Developing the specific car hardware might be cheaper than it was before. The costs are nowadays mostly in engine development, a lot of which can be skipped due to Fiat’s engine/exhaust gas technology, and in electronics, where the same applies. Further, modular component development might help as well, just like what is done at Saab/NEVS at the moment, with the Phoenix. E.g., they will probably need some real nice, independent suspension. But they could probably use that for all 8 cars, which will save a lot of money.
    -Systems developed at Alfa could later on be used at other Fiat businesses as well, like Audi technology diffuses throughout the whole of Volkswagen.
    -Finally, there is too little to be earned from just selling small cars. Fiat really needs bigger cars. So, they need a “plot” for going into that direction, and apparently, decided that this should be done under the “hull” of Alfa Romeo.

    Ah, and that will be “UltraViolet” http://en.wikipedia.org/wiki/Ultraviolet_(film)

    1. The main reason the shares tanked is that the market couldn’t see how Sergo could raise the money for this investment without having to release more shares on the market. You do have to hand it to the guy that he swooped in when others feared to tread. Can you imagine how much better placed Renault would have been if they had owned Jeep?

  5. It sounds like 50% BS, 50% good.
    On the BS side:

    History. Someone at Toyota recently claimed that Lexus’s biggest problem in China was a lack of history, so there’s a logic behind dusting-off old trophies.

    DNA. Other than “Italian design,” that’s BMW’s DNA, not Alfa’s.

    RWD. That’s something to appease simple-minded motoring journalists. Many of Alfa’s great cars have been FWD. Arguably, front-engined RWD doesn’t work on real roads beyond 200hp, so the cars will actually be AWD, meaning heavy, sluggish and unresponsive.

    50/50 weight distribution. Another thing for the simple-minded. What really matters is mass centralization and traction. That’s how Mini Coopers with 100 hp beat 200 hp Austin-Healeys at Monte Carlo. If 50/50 was the thing to have, an F150 with a half ton of manure in the bed would handle like a Lotus Elan.

    On the good side:

    Product. That’s what Alfa really needs.

  6. Ambitious, to say the least. Time will tell, I guess.

    From the “How Our Skunk Works Runs” slide

    – Intense Cohabitation (!?)

    I think something is a bit lost in the translation. 🙂

    I am sure they want intense collaboration and I understand the efficiency of everyone working together in the same location….

  7. Yes, a lot of BS here (all car firms BS about being driver-centred and the opposition isn’t. Yawn) but some good prospects. The only way Alfa will succeed is in building cars that really make people sit up and take notice in terms of the appearance and the engineering. As JonC says, just build a good car.

    The 20-year+ dominance of the German Axis Power we all know about. For everyone else it always comes back to the – beat them or join them? – conundrum.

    I think Alfa need to be really bold and come up with something outrageously striking that harks back to 1920s-50s automotive sculpture of their sporting heyday.

    Dismissing retro inspired designs out of hand is a bore to me. If design ideas from the past are reimagined with finesse at the right moment, then … BANG – you’ve got a new MX-5 on your hands. Except this time even more exciting and desirable because it’s an Alfa. Oh, and make sure it’s great to drive and doesn’t fall apart 🙂

  8. You know things are getting weird when the skunkworks is a key feature of investor day. Seriously, they have lost the effing plot. Next we’ll here about platform-sharing with Lotus.

    Sorry Swade.

  9. I have recently become aware of the work of an American economist named Clayton Christensen. Google for more behind his theories, but his best-known work is called, ‘The Innovator’s Dilemma’. That dilemma simplified is this: A large corporation, when faced with the choice, will always choose to put R&D funding and efforts behind ‘incremental’ changes not ‘disruptive’ (radical) changes. Why? Because incremental changes mean more profits today and disruptive changes could threaten the status quo and may fail. The only way for the big company to engender true disruptive innovation is to buy a company that already has the disruptive designs OR to create a ‘hands off’ skunkworks. That’s what Fiat has done here.

    I take it as a positive. Fiat is admitting that Alfa Romeo has been stifled within their corporate structure

    Cynically, most ‘Skunkworks’ don’t work out, but that’s because most ambitious changes don’t work out. Risk is a part of the equation.

    As you’ve made mention, Saab certainly falls into the same pattern. In fact, I think that there are at least three times when Mr. Christensen’s dilemma applies to pivotal moments at Saab. Crazy how right he is.