Automotive News Europe - December 2019 - 38

AUTOMOTIVE NEWS EUROPE

FINAL WORD

Andrea Malan
is Italy correspondent at
Automotive News Europe.
He can be reached at
amalan@autonews.com.

Alfa could be
Tavares' toughest turnaround
M

ight Alfa Romeo finally get a true
savior in Carlos Tavares? Since
2014, the Portuguese executive has
guided the nearly bankrupt PSA Group
back into the black, and after taking
over Opel/Vauxhall he quickly ended
chronic losses at the former General Motors subsidiary. If PSA and Fiat Chrysler
Automobiles merge, Tavares would have
the chance to attempt what might be his
toughest turnaround yet.
The storied Italian sports car brand has
humbled more than one powerful executive. Under former FCA CEO Sergio Marchionne, three attempts to put Alfa on
the right track flopped. Mike Manley, who
succeeded the late Marchionne in July
2018, needed fewer than 18 months to
realize that Marchionne's final relaunch
plan for Alfa was unachievable. Manley
showed this on October 31 when he announced Alfa Romeo would grow to four
models by 2022 instead of expanding to
seven vehicles by then, which is what was
promised in the 2018 plan. Alfa's current
cars -- the Giulia midsize sedan, Stelvio
midsize SUV and the Giulietta compact
hatchback -- cover three different seg-

ments, but only one is an SUV and none
of the models offers electrification. By
2022, the four-car lineup is expected to
include the Giulia, Stelvio, a new compact
SUV and a new small SUV. Both of the
new SUVs are expected to be electrified.
The first-generation Giulia and Stelvio have underperformed, resulting in
Alfa Romeo's 42 percent sales decline
through September in Europe, where
the Italian marque has been passed by
Tesla, Jaguar, Porsche and Lexus so far
this year. Alfa Romeo's deliveries were
also down 27 percent in the U.S. These
double-digit declines likely contributed
to FCA's decision to scale back Alfa's
product plans, a move that will also help
the Italian-American automaker reduce
capital spending.

Brands are safe
Alfa Romeo received a bit of good news
last month when Tavares, the designated future CEO of the combined automakers, said no brand would be discontinued if the companies merge. The
sobering reality is that even if the merger goes through, Alfa Romeo will have

» The good news for

Photo: Reuters

Alfa is that Tavares
has said no brand
would be shut down if
PSA and FCA merge. «

Carlos Tavares has already turned around PSA and helped make Opel/Vauxhall profitable after decades of losses.

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to compete with a small, aging product
range for the next two to three years,
likely resulting in a further deterioration
of its market share.
Other positive notes for Alfa are that
Tavares is a true "car guy" who races
in his spare time and he successfully
resurrected the Alpine low-volume performance brand while he was the No. 2
at Renault. He also could leverage PSA's
platforms to strengthen Alfa Romeo's
future lineup, ensuring a more regular
stream of new products than it has had
for the last 15 years. Tavares, however,
is also a no-nonsense executive who
wants profits and won't hesitate to make
hard choices to get them.
Some questions to ponder are: What mission should Tavares give Alfa Romeo and
how much new money might be committed to the brand -- and for how long? Trying to transform Alfa Romeo into a brand
with cars for every premium segment
would be a Herculean task. The three
German premium automakers dominate
at that level with 25 to 33 body styles and
volumes around 2 million vehicles a year.
Alfa Romeo hovers at about 100,000, but
it is certainly not alone in failing to challenge the Germans in the premium market, especially in Europe. Nissan's Infiniti
brand announced in March it would quit
western Europe to focus on the U.S. and
China. Jaguar made big gains in sales but
was recently hammered by its slump in
China, quality problems and over investment. PSA's DS Automobiles has sold little
more than 50,000 units both in 2017 and
2018, and its 2019 deliveries in Europe are
below Alfa Romeo's. Despite its well-documented struggles, the Alfa Romeo name
continues to resonate with car executives
and might convince even the most goaloriented CEO to give it one more chance.
After more than a decade of over promising and under delivering under FCA,
Tavares might be the only automotive
executive around capable of setting -
and achieving - sustainable success at
Alfa Romeo. ANE

DECEMBER 2019

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Automotive News Europe - December 2019

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