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John Mahoney30 Jun 2015
NEWS

Critics take knife to Alfa Romeo expansion plans

Industry pundits voice disbelief over Alfa plans to sell 400,000 cars by 2018; apparently “nostalgia isn’t enough”

Following last week’s reveal of the Alfa Romeo Giulia, respected car industry analysts have voiced their concerns over Fiat Chrysler Automobiles boss Sergio Marchionne's ambitious plans for the global re-launch of the famous Italian brand.

Speaking to newswire Automotive News, one such critic of Alfa’s plan for an eight-model line-up and 400,000 annual sales by 2018 is Max Warburton, an industry pundit at asset management firm, Sanford C Bernstein.

"Despite our love of Alfa's past, we're unconvinced by its future," said Warburton.

"While it has history, turning it into a credible premium player will be like launching a new company. It took Audi 20 years or more," said the respected analyst.

Warbuton predicts Alfa Romeo has no chance of posting any profits in its first product cycle of the Giulia and it will be an uphill struggle to come close to realising sales of 400,000 by 2018.

It’s not just profits Alfa Romeo’s boss should be worried about, says Warburton.

Many blame the Italian car-maker's troubles on what’s described as “minimal investment” in the past decade. This year the general consensus is that sales will actually be down, with Alfa only selling 67,500 cars globally (down from 68,300 in 2014).

The key problem for the ailing Alfa, according to Warburton, is a lack of models to help grow sales and reach Marchionne’s ambition of selling 150,000 cars in the US alone.

"It is clear that in the US, car sales grow pretty much in proportion to how many models OEMs offer. Audi sells 180,000 units in the US with over 20 models [across various nameplates], Infiniti 120,000 with about 10 models. It seems inconceivable Alfa could hit its North America target with just two or three cars”.

Slightly more optimistic in his prediction is George Galliers, an analyst at the Evercore ISI brokerage house in London.

Also speaking to Automotive News, Galliers acknowledged that a niche brand favoured by enthusiasts who tend to be ruled by their heart can trigger “strong sales growth” at first, but added that it “plateaus very quickly as mainstream buyers stay away.”

Even in a dream scenario, according the Galliers, his company could only forecast 218,000 global sales -- a fraction more than half of Marchionne’s 400,000 target.

The Giulia is the first model in FCA's five billion euro ($A7b) plan for Alfa.

Confirmed by Alfa's own five-year investment plan announced last May are this year's Giulia (due on sale globally next year), followed between 2016 and 2018 by two replacements for the Giulietta small car, another mid-sizer -- perhaps a coupe -- based on the Giulia, two SUVs, a large flagship sedan and a sports car.

Summing up his prediction for Alfa Romeo, Galliers said: "Five billion euros and nostalgia doesn't equal 400,000 units in 2018."

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