The launch of the Alfa Romeo Stelvio SUV at the Los Angeles motor show this month will kick-start a revival plan for the Italian marque that is mapped out to include up to nine new car launches over the next five years - potentially ushering in a rival for the BMW 5 Series, a flagship large SUV and a new sports car.
Buoyed by the positive early reception for the 3 Series-rivalling Giulia and with the new Giulia-based Stelvio SUV set to be in dealerships in summer 2017, new boss Reid Bigland is crystallising plans to turn around faltering sales figures and re-energise the brand with a dramatic series of new model launches - hinged around the SUV boom - to create substantial sales growth by 2020.
Bigland, a former head of North America for Alfa Romeo and president of the Ram and Dodge brands, was brought in to head up Alfa and Maserati in May this year, with the express goal from Fiat Chrysler Automobiles (FCA) group boss Sergio Marchionne of kickstarting Alfa’s latest faltering sales revival. Despite a €5 billion (£4.4bn) investment plan being unveiled in 2014, it was set back by two years after technical problems delayed the launch of the Giulia and investment for growth in key markets such as China was not forthcoming.
“Our goal is absolutely to go toe to toe with the Germans, but that’s not a two-year plan," said Bigland. "We’re just not going to get there that quickly. They’re in every segment and spinning derivatives off those segments.
“Even with the new [Stelvio] SUV, we will only have 50% coverage of the market. We need to pick our strategy and get it right. We have one chance to make the best possible car with every launch.”
The turnaround is much needed but has Marchionne’s backing because it is also potentially highly lucrative. Alfa’s annual sales in the modern era peaked at just over 200,000 cars in 2001 but have since slid dramatically, as the model line-up has contracted and aged, to a current level of barely 60,000.
However, the launch of the Giulia has created a potentially lucrative foothold in the premium brand heartland and the arrival of the Stelvio will drive profits further, because SUVs command a higher price than traditional saloons.
Family of new SUVs
Speaking to Autocar, Bigland refused to be drawn on whether the Stelvio name would make production - the name Kamal has also been strongly rumoured - but he outlined why it will stand out from its rivals.
“The reason people will buy our mid-sized SUV is because they will get blown away by the driving dynamics,” he said.
“Every car Alfa makes must stand apart for that reason. This car will not disappoint.”
It is expected to be pitched as a dynamic competitor to the Jaguar F-Pace and Porsche Macan, priced from around £40,000 and powered by a range of familiar four and six-cylinder diesel and petrol engines. To emphasise the SUV’s sporty credentials, a twin-turbo 2.9-litre V6-powered Quadrofoglio version is being prepared.
Bigland also hinted that a larger SUV is likely to make production as part of Alfa’s five-year plan. “The whole world is gravitating to SUVs,” he said. “A few years ago, an Alfa SUV would have been sacrilegious, but now it makes perfect sense. Our job is to keep an eye on consumer preferences and give people what they want.”
It is understood the large SUV could be based on the same underpinnings as the Maserati Levante and appear in early 2018 as a BMW X5 and Audi Q7 rival. Again, it would be pitched on its dynamic capabilities, which, Bigland conceded, would rule out a utility-focused seven-seater.
“Whatever car Alfa Romeo makes must stand apart for its agility, noise and general driving experience,” he said. “A large SUV can work in that space - the Maserati Levante proves that, but it’s a five not seven-seater.”
The large SUV’s success or otherwise is said to be the fulcrum on which Alfa’s latest revival plan will pivot. That’s because it will be a relatively high-profit car that could underpin future investment in other models and because accelerating growth in the SUV market could prompt Alfa to put off development of a larger saloon than the Giulia.
Asked if an SUV could be Alfa’s halo model, potentially displacing the launch of a 5 Series rival, Bigland said: “Ten years ago I’d have said we need the saloon to credibly take on the Germans. Now, the explosion in SUV sales changes that. I’m not saying we won’t do the saloon, but it might not be next on the list.”
Additionally, one further SUV bodystyle is said to be under consideration, probably for launch at the end of the decade. It could be a coupé version of the Stelvio in the style of the BMW X4, but rumours persist that if the Giulietta hatchback is replaced, a BMW X1 rival would also be spun off the platform.
Expanding the saloon line-up
The next new production model expected after the Stelvio is tipped to be a Giulia estate. It is set to be revealed at the 2017 Geneva motor show and insiders say the design team has been charged with prioritising a sporty look over a need for class-leading luggage space. However, it will not be as dramatically proportioned as the Alfa 159 Sportswagon, which had less boot space than the saloon in certain seat configurations. Benchmarking is reported to have centred on the BMW 3 Series Touring.
Less clear is whether Alfa will launch a 5 Series rival. It is talked about internally as the Alfa Romeo Alfetta as a nod to the saloon and fastback of the 1970s and 1980s, and launch plans are said to have been drawn up to an advanced stage.
However, Bigland and other Alfa officials are said to be nervous that the rise in SUV sales and declining saloon sales - especially in larger segments - make the development costs of such a car untenable. The cost of reworking the Giulia’s Giorgio platform to fit the car are said to be substantial.
“The segment size and profitability are not what they were,” said Bigland. “The discounting in those segments is brutal now, even among the established players. The market size is also interesting. It’s holding at the moment, but at the cost of profitability. For anything other than an SUV, the value proposition is increasingly challenging.”
The likelihood of producing the Alfetta is also likely to hinge on Chinese market growth. Alfa has little brand presence there but has previously targeted ambitious growth in the region. Today, large saloons are highly prized in China, although that trend is again shifting towards a preference for SUVs.
Alfa’s Golf beater
Alfa bosses are said to have given the green light to a successor to the relatively high-volume-selling Giulietta because of the segment’s ongoing success in Europe and its growing popularity in the US and Chinese markets. However, its launch is said to be at least three years away and possibly more. An estate derivative is also expected.
Insiders suggest the delay in replacing the current car — which was launched in 2010 and accounted for around two-thirds of all Alfa sales in Europe prior to the Giulia’s arrival — centres on a debate over whether to significantly upgrade the current front-wheel drive platform or to modify the Giulia’s Giorgio rear-drive platform.
“The Giorgio platform is capable, but it will depend on customer requirements,” said Bigland. “How many rear-drive cars are there in that segment? It’s a dying breed. To do it would mark us out as different, but we need to look very deeply at what the market is asking for.”
Although the Giorgio architecture was designed to be flexible, the costs of re-engineering it are said to be potentially prohibitively high. Even so, Alfa bosses are believed to prefer this option because it will be in line with the brand’s claims to make driverfocused cars and will allow them to charge a higher price for the car. A final decision on which route to take has been delayed for at least 12 months in the hope that Giulia and Stelvio sales will justify making the extra investment.
Successor to the Brera
Despite the SUV focus in the launch plans, Bigland and his leadership team are acutely aware of how far their plans take Alfa from its sports car roots. They also realise that they risk undermining their core claim of making the sportiest cars in each segment they enter if they do not have a sports car in the range.
The former management team is said to have been content with the decision to switch the firm’s Mazda MX-5 spin-off from being Alfa to being the Fiat 124 Spider. However, a development team is said to be working on a modern reinterpretation of the Alfa Brera, which ceased production in 2010 and struggled to make much impact on the market after being criticised for being underpowered and overweight.
The new car will be sold in coupé and spider forms but will not go on sale until at least 2020. Insiders say Alfa’s management know that the car, which will sit on the same platform as the Giulia, must be visually and dynamically stunning but balance that ambition against relatively tiny sales in the segment and the fact that, in just over five years, fewer than 35,000 Breras were sold.
The launch of such a car would almost certainly raise questions over the need to replace the 4C sports car.
What next for the Mito?
The future of Alfa’s supermini hangs in the balance. The current model has been on sale since 2008, albeit with several significant upgrades, and its peak sales year of 62,000 units in Europe was in 2009. Fewer than 14,000 Mitos were sold last year, albeit accounting for around a quarter of all Alfa sales. Also against the Mito is the fact that superminis are centred on Europe, despite some uplift in the US and very limited uptake in Asia, and profit margins are, at best, slim.
Alfa could lean on Fiat for a low-cost way of staying in the market, but its premium ambitions make producing the Mito unlikely in the long term.
Bigland refused to be drawn on its future. “Arguably, the Mito doesn’t play a role outside Europe, but it continues to make a valuable contribution to Europe, so we’re looking to continue to improve it,” he said.
An uphill battle — as always
Despite the new model plans, Alfa faces a huge uphill battle to meet sales targets and gather the momentum — and profits — to drive this offensive.
The original 2014 growth plan called for sales to rise by around 800% within four years to around 400,000 vehicles a year — around the size of Land Rover now (and more than twice the size of Jaguar).
Even with the launch in the US being rolled out at pace — there are 145 Alfa dealers in the US now, with plans for 200 by the end of next year and around 280 eventually — that market is expected to account for only 150,000 sales a year initially.
European growth is expected to take annual sales in the region beyond 150,000 units, but that still leaves Alfa needing to establish itself in the Asian — and especially Chinese — markets quickly and effectively, to the tune of 80,000-100,000 annual sales.
Alfa also faces the challenge of developing plug-in hybrid powertrains, which will be crucial for the ongoing sales success of its SUVs in the US especially, and eventually developing a structured pure electric strategy.
Although Alfa will be able to draw on established FCA dealerships and sales structures in emerging markets and FCA developed technology, the size of the challenge it faces to grow the momentum started by the Giulia remains huge.