Weekly News Review | 28 November 2016 | Automotive Purchasing and Supply Chain Automotive Purchasing and Supply Chain

Talking Point

FCA risks self-cannibalism for Alfa success

FCA has been dragging its Italian brands through the competitive market since it returned to the US in late 2014, following a long-term absence stretching over nearly two decades. However, things are starting to look up for the Italian-American automaker, with Fiat sales improving in the region and Maserati sales skyrocketing, thanks to the luxury brand’s new Levante SUV. Yet there is still a long way to go for CEO Sergio Marchionne, who has set out a long-term business plan to build up the group’s brands, including Alfa Romeo with, just like its Italian sibling, an SUV variant. Times are changing and it is now becoming common for sporty and luxury automakers to submit to the four-by-four market, fuelled by overwhelming demand from a new breed of customers.

Even if you are not a fan of SUVs, you must admit that the recently unveiled Alfa Romeo Stelvio is a thing of beauty. Somehow - though we should not be surprised, given the history - Alfa Romeo has produced a sophisticated vehicle that stands out from the crowd, albeit arriving rather late to the party. But, as we have seen in the past, German rivals will undoubtedly sell better. This brings me onto the issue with the automaker’s recovery strategy, which has been implemented to revive the Alfa badge - yet again. I agree that FCA’s aggressive product expansion will help fuel recovery, although Marchionne must be careful not to be his own catalyst for disaster, especially between the Alfa Romeo and Maserati brands, which will unintentionally be going head-to-head. The Stelvio is considered as a mid-sized SUV, whereas the Levante fits into the full-sized SUV category with a slightly different price point. However, I believe that this is not enough of a difference to completely eliminate one of them from a consumer’s perspective. There is certainly a risk of cannibalism within the FCA Group. Marchionne will have to combat this issue quickly, on top of batting away competition from Audi, BMW and the VW Group which have all taken positions on each layer of the SUV market.

I think it is extremely important that FCA price the Stelvio correctly, otherwise it will be too cheap for the elite bracket, such as the Levante and Porsche Macan, and too expensive for the entry-luxury market, with the arrival of the Jaguar F-Pace dominating sales. I think that Alfa Romeo does not hold the desire factor it once did, so it is dangerous to categorise it with top luxury brands; people are looking at it as the badge that never recovered and, unfortunately, I do not see this changing anytime soon - unless something is changed.

Alex Kreetzer

Alex Kreetzer - News Editor

Simon Duval Smith

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