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How Alfa Romeo plans to triple sales in the next 3 yearsLuca Ciferri
Automotive News Europe | April 9, 2013 06:01 CET
Skeptics think Fiat CEO Sergio Marchionne's aim to triple Alfa Romeo's global sales to more than 300,000 units by 2016 is too ambitious. But Alfa's European boss, Louis-Carl Vignon, is convinced Alfa has enough fresh products to meet -- and possibly exceed -- Marchionne's target.
Currently, Alfa gets most of its volume from two aging models, the MiTo subcompact and the Giulietta compact, in a slumping European market. With fresh product and by expanding into new markets including the United States, the brand can dramatically improve sales, Vignon believes. "With our current segment coverage and our geographical footprint, we compete in about 5 percent of the global market," he said. By 2016 Vignon wants Alfa to compete in 32 percent of the global market.
Last year, Europe accounted for about 90 percent of Alfa's 101,000 global sales. To reduce its reliance on on the region, Alfa this year will return to the U.S. market it quit in 1995. "Alfa's brand awareness in the U.S. is still at a relevant level despite an absence of nearly 20 years," Vignon said.
Alfa says Europe and the United States will be its two largest markets by 2016 with Europe, Africa, Russia and the Middle East accounting for about 180,000 of its planned 300,000 sales.
The 4C small sports car will lead Alfa's U.S. comeback. At the Geneva auto show, Alfa showed a so-called Opening Edition of the 4C coupe equipped with carbon fiber inserts in the headlamps and in the rear spoiler. Alfa will make 1,000 units of the variant and sell them at prices starting at 60,000 euros in Europe.
In June, Alfa will open the order books for the standard 4C, which will start at about 55,000 euros. Alfa plans to build about 700 4Cs this year, with deliveries in continental Europe due to start in September. Right-hand-drive variants will arrive at dealers in October. The automaker did not reveal the car's starting price for the United States, where the 4C will debut after the Los Angeles auto show in November.
By the end of 2014, a 4C targa with a small removable carbon fiber roof will join the 4C range. Alfa plans to make 26,000 units of the 4C coupe and targa during its seven-year life cycle.
The 4C is a low volume image-booster so the brand's hopes of tripling sales hinge on the mid-sized Giulia sedan and wagon and a large-premium sedan based on the Maserati Ghibli's underpinnings. This rear-drive Alfa flagship will compete with the Audi A6 and BMW 5 series. Alfa plans annual sales of 30,000 units for the sedan, which will start at about 55,000 euros. Sales begin in 2015 in Europe, China and the United States.
That same year Alfa will launch the Giulia, which it expects to account for a third of its total volume. "A mid-sized sedan is fundamental in North America, where this type of vehicle covers 20 percent of total sales and is also crucial in Asia-Pacific, where represents almost 9 percent of demand," Vignon said.
This is how Alfa Romeo foresees its lineup by 2016 (average annual production of model)
Mid-sized SUV 40,000
Large sedan 30,000
4C coupe/targa 3,500
Source: Automotive News Europe research
Alfa likely will sell the Giulia wagon only in Europe where wagons account for more than 40 percent of mid-sized model sales.
Also in 2015, Alfa will launch a rear-drive two-seat roadster known as the Spider. It is being co-developed with Mazda, which will produce the Alfa roadster alongside its MX-5 in Japan.
Alfa's fifth new model will be a mid-sized SUV. "It will be a brand statement," Vignon said, adding that the SUV's width would be in the range of 4600mm to 4800mm.
Alfa Romeo will sell the first 1,000 4Cs for a starting price of 60,000 euros.
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CEO bets billions on Alfa, Maserati revival; skeptics see many risks, few rewardsLuca Ciferri
Automotive News Europe | March 7, 2013 06:01 CET
TURIN -- Fiat CEO Sergio Marchionne is betting billions of euros that Alfa Romeo and Maserati will help drive the automaker's money-losing European operations back into the black by 2015-2016.
He's also counting on the underperforming sporty brands to help ignite a production boom that will turn the company's under-used European plants – particularly those in Italy – into export champions that will work around the clock to meet untapped global demand for models such as the Levante, Maserati's first SUV.
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Marchionne's big gamble on Alfa and Maserati comes at a time when rivals such as PSA/Peugeot-Citroen, General Motors and Ford Motor are negotiating to close European car plants to adjust to shrinking demand and to end big financial loses in the region.
Marchionne has said for years that European volume automakers must make painful capacity reductions to become profitable in Europe again. Now the CEO has accepted that it is politically impossible for Fiat to close factories in Italy. To fully use the group's underperforming Italian plants, Marchionne aims to increase Maserati's annual sales to more than 50,000 by 2015 from about 6,000 last year, and he wants Alfa to triple sales to more over than 300,000 by 2016.
Boosting exports from Italy to global markets makes sense as the European new-car market has shrunk every year since peaking at 16 million units in 2007. New-car sales dipped 8 percent to 12.5 million in Europe last year and volume is forecast to slip below 12 million this year. Analysts don't see a return to the pre-crisis sales level until the end of the decade at the soonest.
Marchionne is also wise to concentrate on the Fiat Group's higher-end brands, especially considering the success of BMW, Audi and Mercedes-Benz. The three German premium automakers have avoided the European sales declines that have plagued most volume brands over the past few years. In addition, all three have added shifts or shortened vacation periods at their European plants in recent years to keep pace with strong demand for their models in countries such as China and the United States.
"We will focus on Alfa Romeo and Maserati to access the higher end of what we consider to be a permanently polarized market now," Marchionne said last month.
Can't do both?
Analysts are skeptical about Marchionne's new plan because it will likely conflict with his other mission, which is to take full control of Chrysler Group. Industry watchers say Fiat simply does not have enough cash to buy the stake it still needs to take over Chrysler and also to invest billions to revive Alfa Romeo and Maserati.
"While Fiat adapting its product to a polarizing market makes sense, we think the market could be disappointed that capacity actions do not feature in Fiat's plans, especially given Ford, GM and PSA have all made tough capacity decisions recently," Morgan Stanley analysts wrote in a note to investors. In early February, Marchionne reiterated that Fiat won't close any Italian vehicle assembly factories. The Cassino, Melfi, Mirafiori (Turin) and Pomigliano plants have an installed capacity of 1 million units, but last year their combined output declined by 18 percent to 394,620 units, according to the Italian automakers association ANFIA.
An automaker should use from 75 percent to 80 percent of installed capacity to reach break-even, industry observers say. Last year, Fiat's capacity use rate was about 40 percent in Italy and just above 50 percent in the rest of Europe, which includes plants in Poland, Serbia and a joint venture in Turkey.
Managing capacity might get even harder for Fiat as it adds production in Italy. In January the automaker reopened an abandoned Bertone plant outside of Turin, where it plans to build up to 50,000 Maseratis a year. If Marchionne's plan to build upscale vehicles in Italy works, high-margin Alfas, Maseratis and Jeeps will offset the country's high labor costs and low labor flexibility.
2 million vehicles
The CEO envisions Fiat's European plants building about 2 million cars, SUVs and light commercial vehicles annually by 2016, up from 1.25 million units last year. At that production volume, Marchionne says that the company would break even in Europe.
By 2016, about half of the additional 750,000 units built in the company's European plants will be sold in Europe and the other half – dominated by Alfa Romeo, Maserati and Jeep models – will be sold in global markets, according to Marchionne's planning.
Analysts believe Marchionne's mission might be too costly to achieve. "Fiat's plan to move upmarket comes with a big price tag. With up to 18 billion in capital expenditures to fund over two years, net debt is unlikely to decline before 2015, meaning a full buyout for Chrysler may be off the table for some time," Morgan Stanley said.
Barclays Capital also signaled concern in a recent analyst note. The firm wonders how Fiat can succeed when most of its rivals "are pursuing the opposite strategy of trying to localize production to hedge against currency risk." The analysts also said: "Competitors have tried on numerous occasions but failed to push upscale, with the notable exception of Audi."
Another skeptic is Max Warburton of Bernstein Research. He wrote: "Perhaps it is possible to grow Maserati, Alfa, the [Fiat] 500 [range] and Jeep, but it will take time, capital and success is obviously far from assured." Warburton noted that Marchionne's strategy results from pressure from the Italian government to pursue growth when the pragmatic choice would be to rationalize.
Marchionne knows that the revival of Alfa and Maserati will take time. His challenge is to exploit the brands' potential, which is something that has eluded him. In my first interview with Marchionne in October 2005, he shared this view on Alfa: "The Alfa issue is complicated and simple at the same time. Alfa is a great, world-renowned brand, but it is selling fewer cars than planned." Seven and a half years and two unsuccessful relaunches later, Alfa remains a Rubik's Cube that the workaholic CEO just can't seem to solve. In 2012, global sales slipped 27 percent to 101,000, which was Alfa's lowest total since 1969.
Last October, Marchionne announced a new plan for Alfa that calls for the introduction of nine all-new or replacement models in the next four years to boost sales to 300,000 by 2016. To reach this goal the CEO has committed more than 1 billion euros to Alfa for 2012 to 2014.
Barclays analysts have doubts about the Alfa plan because, as they said in a note to investors: "It is not the first time we have heard an ambitious volume plan for Alfa." In the past, Marchionne was even more bullish with his Alfa sales predictions. He said in April 2010 that he wanted the brand's annual sales to reach 500,000 by 2014.
Just keeping Alfa's sales steady will be tough. At the Geneva auto show this month, Alfa will debut the production version of the 4C sports car, but the automaker won't get a significant sales boost from the coupe because output will be limited to 2,500 units. Until 2015, Alfa will offer just two aging models: the MiTo subcompact and the Giulietta compact hatchback.
Massimo Vecchio, a financial analyst with Mediobanca Securities in Milan, said the new Alfa plan will not succeed because the competition is too tough. "Even if it reaches the planned 300,000 units, Alfa will continue to lose money and remain a pygmy in the battle of titans between the German premium brands, which are already selling well over a 1 million units a year," Vecchio said.
Marchionne is investing more than 1 billion euros in Maserati to double its product range to six models from three. Those additional models are expected to boost sales eightfold by 2015 compared with last year's 6,288 units. Maserati is already an export-oriented brand, with 2,904 units sold last year in the United States, the brand's biggest market, and 930 in China, its No 2 market.
The first model in Maserati's product offensive is the Quattroporte. The Quattroporte went on sale in Europe in February starting at 149,000 euros in Italy for the top-of-the-range V-8 model. The car's U.S. and Asian rollouts happen this summer. The company aims to sell from 12,000 to 15,000 Quattroportes this year, which is more than twice the previous Quattroporte's 5,088-unit peak in 2007.
Maserati plans to unveil a mid-sized four-door sedan called the Ghibli at the Shanghai auto show in April. At about 5000mm long, the Ghibli will compete with sporty sedan offerings including the Audi A6, BMW 5 series and Mercedes E class. The Ghibli will start at about 70,000 euros when it goes on sale in Europe this summer.
A third model, the Levante SUV, will be built at Fiat's Mirafiori plant in Turin using underpinnings shared with the Jeep Grand Cherokee. Production will begin in 2014. Combined volume for the Quattroporte and Ghibli is about 35,000 units a year at full capacity. The Levante would account for another 20,000 units.
Marchionne believes that the only thing that could keep Maserati from reaching its ambitious goal would be poor product execution, "which is highly unlikely," he added.
Mediobanca's Vecchio agrees: "In the years to come, Maserati looks to become a success story. This relaunch was long overdue."
In 2012, only one Fiat plant in Europe and Turkey was above the 75% to 80% capacity utilization required for a factory to break even
Plant (brands made) output capacity use
Cassino, Italy (Alfa, Fiat, Lancia) 91,809 46%
Melfi, Italy (Fiat) 106,857 36%
Mirafiori, Italy (Alfa, Lancia) 46,809 17%
Pomigliano, Italy (Fiat) 155,822 74%
Tychy, Poland (Fiat, Lancia, Ford) 293,890 65%
Kragujevac, Serbia (Fiat) 23,830 13%
Bursa, Turkey (Fiat, others*) 189,680 63%
* Others includes Citroen, Peugeot, Opel
Source: R.L. Polk estimates
Fiat CEO Sergio Marchionne is counting on the new Quattroporte (background) to help Maserati boost annual sales to more than 50,000 by 2015 from about 6,000 last year.
Photo credit: Reuters
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Alfa Romeo reboot marks tough road for Fiat recovery
Automotive News Europe | March 4, 2013 11:34 CET
GENEVA/DETROIT (Reuters) -- Sergio Marchionne does not walk on water. Nevertheless, it may require a miracle to pull off the Fiat chief's latest gambit: Take his sporty Alfa Romeo brand global with more expensive models and triple its sales volume by 2016 -- after years of losses.
To add extra spice to the challenge, which takes place as European car sales plummet to 17-year-lows, the new Alfas will be built in Italy, where labor and material costs are far higher than in the United States, Asia or Eastern Europe.
The plan is however about far more than the fate of the Alfa brand. It represents Fiat's only real hope of combating a collapse in its home market and breathing new life into idled factories. Should it fail, and the new cars flop, the company that Italians view as a cornerstone of their economy will have little choice but to put thousands of employees out of work and tip entire communities into turmoil.
Marchionne has form where ailing brands are concerned. The 60-year old has been widely hailed for his 2009 acquisition and subsequent turnaround of bankrupt U.S. automaker Chrysler. However his announcement late last year of a strategic overhaul of the 103-year-old Alfa Romeo brand -- which Fiat acquired in 1986 and has since failed to revive despite repeated attempts -- has been greeted with skepticism.
"I wouldn't write the plan off," said Bernstein analyst Max Warburton, noting the Alfa brand's resilience despite years of neglect. "But get it wrong, or find consumers aren't interested, and it will be a financial catastrophe."
Marchionne is betting on Alfa because he believes it can deliver the global profile that Fiat cannot and far greater sales volumes than Maserati.
Alfa's overhaul comes with a 1 billion euro ($1.3 billion) price tag to pay for the introduction of five new models by 2016, and a revamp of the brand's two existing compact cars.
Leading the project is the limited-edition 4C sports car, a compact two-seater which makes its public debut at the Geneva auto show on Tuesday and goes on sale later this year. Pricing is rumored to be between 50,000 and 60,000 euros.
The 4C, competing with the Porsche Cayman and Boxster, will be joined in 2015 by the Spider roadster, co-developed with Mazda and priced from less than 23,000 euros ($30,000), and a new sedan expected to share underpinnings with Chrysler and Ferrari-sourced engines with the new Maserati Ghibli.
Another weapon will be the Giulia, which will be unveiled in 2015 and the first mainstream Alfa model to be sold in the United States since it quit that market in 1995. The Giulia sedan and wagon will be followed in 2016 by replacements for the Giulietta and MiTo hatchbacks.
Marchionne believes this strategy will help Fiat raise Alfa's annual sales to 300,000 cars by 2016. While that goal is down dramatically from a previous target of 500,000 cars by 2014, it still looks a stretch from the 92,000 Alfas sold in 2012 -- the worst showing in more than 40 years -- and the brand's previous best of just over 200,000 sales in 2000.
Barclays Capital is among those doubtful of the scheme.
"It's not the first time we have heard an ambitious volume plan for Alfa," the investment bank said in a recent note to investors. "Volumes were supposed to be 400,000 in 2014 rather than the 70,000 that seems likely."
The top global auto forecasting houses are equally unconvinced. IHS Automotive and LMC Automotive are projecting annual sales of around 230,000 Alfas by 2016.
"Alfa is going to have a fight on its hands in luring luxury buyers into its vehicles," said LMC senior analyst Joseph Langley. "Charging a premium and leaning on heritage is not enough in the highly competitive luxury segments, as Cadillac [and] Lincoln have experienced."
Marchionne himself has said Alfa's task will be difficult. The division has had six bosses since his own 2004 appointment, and none of them have been able to move the needle much.
"I left Alfa because I couldn't get the green light for a real product plan with the right motors for the right clients ... who are now driving BMWs," said an executive who ran Alfa less than a decade ago.
"It was clear to me there was a lack of resources. Alfa had become an empty box."
Eye on Audi
European car demand is expected to contract even further this year, squeezing mass-market brands still harder between excess product and cut-throat pricing, while a strong euro adds further complications.
Marchionne is also up against luxury buyers' preference for well-established German premium brands such as BMW and Audi, each of which sells around 1.5 million cars a year.
While Fiat has struggled to find cash for Alfa, its deep-pocketed rival Volkswagen has become the envy of the industry for its lengthy but sure-footed transformation of Audi from a dowdy also-ran to a high-tech cash cow.
The upscale VW brand's rebirth may now serve as a role model for Alfa salespeople.
VW Chairman Ferdinand Piech has made no secret he thinks Alfa would be a good fit within the group's expansive portfolio of brands, where it could benefit from their pooled vehicle architectures and technology. But Marchionne has refused to sell Alfa, and observers think he is unlikely to change his mind.
That's because he sees Alfa as the lynchpin of his broader plan to boost European production by 800,000 cars a year. He expects Alfa to account for nearly 40 percent of that additional output, with many of those being higher-margin cars shipped to North America and other export markets.
Industry observers aren't convinced the strategy will play out as the Fiat boss envisages.
"Moving Alfa away from the mass market is the biggest risk in Fiat's turnaround plan" said a fund manager. "Until now, all their plans for Alfa Romeo have fallen below target."
The limited-edition 4C is a key model in Alfa's overhaul.
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Sports car leads Alfa's American encore in 2013
Greg Migliore 8:54 am, March 5, 2013
Mark it down -- Alfa will be back in the United States this year. That's according to CEO Harald Wester, who firmly said the Alfa Romeo 4C sports car, shown at the Geneva motor show, will be on sale at the end of 2013 in America.
The new Alfa Romeo 4C will be displayed at the Los Angeles Auto Show later this year -- almost right before the carbon-fiber creation goes on sale. Pricing will also be announced at the L.A. show. The European model will start at 60,000 euros, or about $78,000.
Calling it the "modern interpretation of core DNA," Wester revealed the 4C in production guise Tuesday at the Geneva motor show. The two-seater carries over almost exactly from the original concept from two years ago. It will run a 1.8-liter direct-injection four-cylinder engine pushing out 240 hp paired with a six-speed dual-clutch transmission.
The 4C will have an annual production of 3,500 globally, Wester said. Of that, 1,200 will come to North America, 1,500 to Europe and 800 then distributed throughout the rest of the world.
Alfa will also sell special launch editions of the 4C, which will include "professional advice" to instruct the buyer how to handle their sports car. North America will get 500 launch editions, followed by Europe (400) and the rest of the world (100).
"The 4C is a pure Alfa Romeo supercar," Wester said.
The Alfa Romeo 4C and friends.
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Fiat dealers can postpone expansions as Alfa Romeo returns to U.S.
Automotive News -- February 10, 2013 - 10:33 am ET
Grady: "The (Alfa) 4C is the first vehicle that comes at the end of this calendar year, and it’s going to go to the current Fiat dealers that are performing."
ORLANDO -- Changes in the product cadence for Alfa Romeo’s return to the United States means Fiat dealers may be able to postpone required expansions of their stores for up to two years until more vehicles arrive in 2015, Chrysler Group’s top dealer executive said.
But not every Fiat dealer in the United States will automatically get Alfa Romeos to sell, said Peter Grady, Chrysler’s vice president for network development and fleet.
Last month, Chrysler revealed that the Alfa 4C will arrive in Fiat dealerships by the end of this year, marking the first time that the Italian high-performance brand has been sold in the United States in broad numbers since 1995.
“The 4C is the first vehicle that comes at the end of this calendar year, and it’s going to go to the current Fiat dealers that are performing,” Grady said in an interview here. “So if you’re selling and you’re taking care of your customer, you’ll be first up for Alfa Romeo.”
Chrysler’s Italian owner, Fiat S.p.A., has allocated 1,000 Alfa 4Cs for sale in the United States each year out of a total annual global production of 2,500. Fiat has 202 dealerships in the United States today, and Grady said he expects to have 220 Fiat dealerships up and running by Oct. 1.
Many of the existing Fiat dealerships are in malls or other locations that do not have attached service departments. Grady said Chrysler has always told Fiat dealers that they must build “full, complete” dealerships before they could get Alfa Romeo vehicles to sell.
But Fiat’s amended product plan leaves the low-volume 4C as the only Alfa on sale in the United States until 2015. Grady said it would not be fair to ask dealers to build full dealerships to sell Alfa based only on a limited run single model.
The Fiat dealerships will get a second Fiat model, the four-door 500L, to sell this year, but struggling Fiat dealers have longed for Alfa Romeo’s return to the United States to bolster their profits.
“With the way that the product plan is now coming to market, we’re very keen on making sure that these guys do not over-invest while the volume is somewhat limited,” Grady said. Instead, dealers who are meeting sales and customer service targets will get the car, even if they have a store in a mall, so long as they agree to build a “full facility” before the next wave of Alfa Romeos arrive in 2015.
“The 4C is going to be a great image car, a great way to launch the brand,” Grady said. “But it’s the next vehicles that you saw on that [product] plan that are the volume vehicles.”
Fiat dealers will not have to pay an additional franchise fee to sell Alfa Romeos in their showrooms, Grady said, but will have to invest in signage and other requirements necessary to sell the brand.
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Automotive News Europe | January 30, 2013 20:31 CET
TURIN, Italy -- Fiat SpA will announce within a month a technical cooperation between its Ferrari and Maserati subsidiaries on engine work aimed at rebuilding the Alfa Romeo brand.
"Ferrari will take a more active role in engine development for Alfa, similar to what Ferrari already did for Maserati," Fiat-Chrysler CEO Sergio Marchionne said Wednesday in a call with analysts.
Marchionne added that "engines worth wearing the Alfa badge" remain the biggest issue he is facing in reviving the sports-car brand.
After struggling for years to relaunch Alfa, Marchionne in November announced a new plan, calling for nine new-model introductions from 2013 through 2016. He hopes to triple Alfa sales to 300,000 units annually in 2016, from about 100,000 last year.
Three new models
Marchionne said Alfa is currently working on the development of three new products, in addition to the brand's three existing models.
A Fiat spokesman told Automotive News Europe that Marchionne was referring to the mid-sized Giulia sedan and wagon and a two-seat, rear-wheel-drive spider.
The Giulias models, set to replace the Alfa 159 discontinued at the end of 2011, are due to debut in Europe in 2014 and in the United States in 2015. The Giulias will be built in the Cassino plant in central Italy. The factory already builds the Giulietta compact for Alfa as well as the Delta for Lancia and the Bravo for Fiat.
The Alfa spider will be built by Mazda Motor Corp. in its Hiroshima, Japan, plant, together with the replacement of the MX-5 roadster, starting in 2015.
The spokesman added that the Alfa 4C limited edition coupe, unveiled as a concept car at the Geneva auto show in March 2011, is already considered part of the existing Alfa range. The others are the MiTo subcompact and Giulietta compact.
The 4C will go on sale by the end of the year in Europe and the United States. Production is planned at 2,500 units a year. Of those, 1,000 would be bound for Europe and the United States each; the balance would be sold in the rest of the world.
Ferrari input for Maserati
Supercar maker Ferrari co-developed with Maserati two twin-turbo gasoline direct-injection engines that are making their debut on the Maserati Quattroporte flagship sedan.
The redesigned Quattroporte, unveiled at the Detroit auto show this month, goes on sale in Europe in February and in Asia in March. It will reach the U.S. market in May or June.
The standard Quattroporte comes with a 3.0-liter V-6 delivering 410 horsepower; the top-end model is powered by a 3.8-liter V-8 delivering 530 hp.
Both Maserati engines are built at Ferrari's Maranello, Italy, complex, which underwent a $67 million upgrade to add the Maserati power plant.
So far, Fiat has only said the Alfa 4C will come with a new, all-aluminum 1.75-liter, 4-cylinder direct injection turbo engine rated at about 250 hp.
Marchionne: Seeking "engines worth wearing the Alfa badge"
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Automotive News Europe | January 29, 2013 06:19 CET
MILAN (Bloomberg) -- Fiat Group plans to introduce the first Alfa Romeo SUV in the latest effort to transform the languishing nameplate into a global luxury brand to challenge Audi.
The SUV is slated to hit showrooms in 2015, said three people familiar with the matter, who asked not to be identified before a public announcement of the vehicle. The car, one of nine new Alfa models due to be rolled out over the next four years, is aimed at helping reach the brand's goal of tripling sales by 2016.
Alfa, a symbol of Italian auto styling and performance for decades, is the centerpiece of Fiat CEO Sergio Marchionne's strategy to end losses in Europe. Fiat's European turnaround plan calls for 16 upscale models to start production by 2016 at under-used assembly plants in Italy.
"Alfa is the only brand that can boost margins for the group," said Roberto Ferrari, owner of Fiat dealer Sprintauto, near Milan. If the right models get rolled out, "Alfa could become the Apple of the car industry. We just need our equivalent of the iPhone."
The new Alfa SUV, which could bolster a planned return to the United States this year after an absence of almost two decades, will be based on technology and parts used in the Dodge Dart, the people said. The model is set to be built at the Mirafiori plant near Fiat's headquarters in Turin, they added.
A Fiat representative declined to comment on the possible new car.
Fiat 2012 results
Alfa's image gives it potential to appeal to a global audience and charge higher prices for cars that share technology with mass-market models, lifting the group's profit like Audi does for Volkswagen.
Fiat's need for an Alfa revival may be evident on Wednesday, when the company releases 2012 results. Losses in Europe probably widened 49 percent to 743 million euros ($998 million), according to Kepler Capital Markets. Fiat doesn't break out Alfa results.
"Given Fiat's intention to maintain its production capacity in Italy, the new focus on the premium segment is probably the sole and best strategy," said Monica Bosio, an analyst at Intesa Sanpaolo in Milan. "But there's a very high risk" that the plan will fail.
The SUV will face tough competition. BMW, which already has four SUVs, is developing the new X4. Mercedes-Benz is also planning a compact SUV to add to its lineup. At the upper end, VW's Lamborghini and Bentley are both developing SUVs.
Fiat has said it needs to fix its European business before finalizing a planned merger with Chrysler Group. To show progress in the turnaround, Marchionne and Fiat Chairman John Elkann will inaugurate a factory on Wednesday in Grugliasco, northern Italy, home of the revamped Maserati Quattroporte.
Maserati and Chrysler's Jeep represent the other pillars of Marchionne's strategy to shift to higher-end cars. The goal is to reduce Fiat's reliance on Europe, where auto demand is headed for a sixth straight annual decline this year.
Total earnings before interest, taxes and one-time items, which Fiat calls trading profit, probably rose 57 percent to 3.75 billion euros on the first full year of contributions from Chrysler, according to a Bloomberg survey of 16 analyst estimates. Intesa's Bosio estimates that 3.03 billion euros came from Chrysler, which Fiat controls.
Fiat shares have risen 25 percent this year, to 4.72 euros, giving the company a market value of 5.9 billion euros.
Marchionne said in a Jan. 14 interview that Fiat may reduce its losses in Europe in 2013 as car sales in the region may start recovering by the end of the year.
Alfa carries most of the weight of the turnaround, with the company planning to invest 1 billion euros from 2012 to 2014 to transform Alfa into a global premium brand. Fiat Group is aiming for deliveries of more than 300,000 vehicles from Alfa by 2016, compared with 50,000 Maseratis by 2015.
Alfa's potential is based on an image stemming from luxury cars in the 1930s and racing success in the 1950s. The brand became part of pop culture when Dustin Hoffman drove a Duetto Spider in the film "The Graduate" in the 1960s.
The reputation hasn't translated into commercial success. A lack of recent investment in new models and little exposure to markets outside Europe caused sales to slump to 101,000 vehicles last year, about half the 2001 peak. Audi, which makes three SUVs, sold 1.45 million autos last year.
The 4C sports car, which will go on sale in Europe and the United States this year, marks the start of "the resurrection of Alfa," Marchionne told reporters this month in Detroit. The next steps in Alfa's turnaround include a full-sized sedan based on the Maserati Ghibli and the mid-sized Giulia sedan and wagon, which could be built at Fiat's Cassino plant near Rome, two of the people said.
A new version of the roadster featured in "The Graduate" will be made in Japan starting in 2015 in a partnership with Mazda Motor Corp.
Alfa showed an SUV concept in 2003 that was never built, and since taking over Fiat in 2004, Marchionne has twice failed to meet targets of selling more than 300,000 Alfas annually. In 2007, he said the target could be met in 2010, while three years ago, he aimed to increase sales to about 400,000 in 2013. Marchionne's latest effort could again fall short.
Researcher IHS Automotive predicts Alfa sales will rise to 231,300 cars by 2016, 23 percent shy of the CEO's target. "You always have to take Marchionne's forecast with a pinch of salt," said Ian Fletcher, an IHS analyst in London. "He has to find customers who will decide to leave Audi, BMW or Mercedes to drive an Alfa, which is a tremendous brand but it has to prove it will offer a complete lineup."
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Fiat signs accord with Mazda to build new Alfa roadster
Automotive News Europe | January 18, 2013 11:05 CET
MILAN (Reuters) -- Fiat today said it had signed a final agreement with Mazda for the Japanese automaker to build a two-door roadster for Fiat's upscale Alfa Romeo brand.
The two-seat convertible will be based on the next-generation Mazda MX-5/Miata and will be built at Mazda's factory in Hiroshima, Japan, the companies said in a joint statement. Production will start in 2015.
Fiat CEO Sergio Marchionne is overhauling Alfa Romeo with new models in an effort to mimic Volkswagen's success with Audi, which is the German carmaker's main moneymaker. The agreement today finalizes plans the Italian and Japanese companies announced in May.
The agreement paves the way for Mazda to increase its capacity utilization through Alfa. For Fiat, the deal may help the company gain access to Mazda's engine and lightweight technology.
The Alfa Romeo and Mazda roadsters will be developed for the global market. Each version will have distinct styling and use engines unique to each brand, the companies said today.
Reuters and Bloomberg contributed to this report
Mazda and Fiat Sign Agreement for New Alfa Romeo Roadster
Further to the joint announcement of May 23, 2012, Mazda Motor Corporation (Mazda) and Fiat Group Automobiles S.p.A. (Fiat) announced today the signing of the Final Agreement which will see Mazda produce an open-top two-seater sports car for Fiat's Alfa Romeo brand at its Hiroshima, Japan, plant starting from 2015.
The new Alfa Romeo roadster will be developed for the global market, and will be based on the architecture of the next generation Mazda MX-5. The agreement foresees for both Mazda and Fiat to develop two differentiated, distinctly styled, iconic and brand-specific roadsters featuring rear-wheel drive.
The Mazda and Alfa Romeo variants will each be powered by specific proprietary engines unique to each brand.
Through this contractual agreement, Mazda aims to enhance development and production efficiency and revitalize enthusiasm for open-top two-seater sports cars around the world. For Fiat, this collaboration will permit the company to deliver a modern interpretation of the classic Alfa Romeo roadster utilizing the latest technical solutions, helping Alfa Romeo to achieve its stated goals by 2016.
Pininfarina created the Duettottanta concept for Alfa Romeo in 2010, providing clues about how a new Alfa roadster might look.
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