Alfa Romeo Returns to the States
Alfa Romeo's return to the U.S. has been talked about off and on, and anticipated by car enthusiasts, in similar fashion to how opera fans anticipate whether Placido Domingo might reprise the starring role in Pagliacci.
In both cases, one has to wonder what the impact of either would be aside from the spectacle.
But while Domingo shows no signs of donning the clown makeup again soon, the Italian sports carmaker, a division of Fiat (FIA.MI), is not only making a comeback to American shores this summer, but it thinks so much of its prospects that it's scouting for a partner with which it might build vehicles in the U.S. to avoid the stiff penalty pricing on imports because of the weak U.S. dollar.
After Alfa Romeo packed up what remained of its brand in the U.S. in 1995, it has talked several times about a return. Financial woes, though, kept Fiat focused on its home European market, especially as the European Union made it easier for Asian car companies to encroach on previously protected markets. Today, with Fiat making money, the U.S. is back on its radar.
Alfa, which has been owned by Fiat since 1986, will enter the U.S. with a super-premium offering this summer: the 8C Competizione, a 450-hp V8 coupe that will cost in excess of $200,000. The car will retail through Ferrari-Maserati dealerships. Just 90 will be imported to the U.S. and they are nearly all spoken for.
For future Alfas, the company is still deciding on what distribution channel it will use. Depending on the models Fiat plans to export or build in the U.S., piggybacking on the Ferrari-Maserati network makes the most sense.
Marketing cars that cost below $100,000, such as Alfa Romeo's Spider, MiTo, or the 159 will require Alfa Romeo to boost its quality ratings. Alfa Romeo scored below the industry average for customer satisfaction in surveys done by J.D. Power and Associates for Germany, France, and Britain this year. In Britain, Alfa ranked 31st out of 33 brands.
Still, there is an audience in America for almost every brand, especially foreign premium brands. Italian-Americans, not surprisingly, were a key constituency of both Alfa Romeo and Fiat when both brands were sold in the U.S. The Alfa Romeo Spider has a revered place in American cinema, as the car Dustin Hoffman's character drove in the 1967 film The Graduate. In The Godfather, Michael Corleone, played by Al Pacino, drove a black Alfa Romeo 6C while in exile in Sicily. This was the car that was booby-trapped and exploded with Apollonia, his Sicilian wife.
Fiat executives have been cagey about specifying sales volumes for the U.S., as well as specific models beyond the 8C. But Alfa Romeo CEO Sergio Marchionne told Automotive News last January that the brand should reach annual sales of 20,000 in the short term and 50,000 units in the medium term. Back in 1995 Alfa sold just 500 cars.
The cost of relaunching in the U.S. is expected to be around $150 million. AutoWeek has reported the models coming to the U.S. will be Alfa's next-generation midsize 159 sedan shown at the Geneva Auto Show (BusinessWeek.com, 3/4/08) last February, the Brera coupe, and Spider. All three models are built on the same engineering platform.
An Alfa 159 today costs between $40,000 and $52,000 when British pounds are converted to dollars. In that range, the Italian brand would be competing head-to-head with such marquee brands as Toyota's (TM) Lexus, General Motors' (GM) Cadillac, Nissan's (NSANY) Infiniti, Honda's (HMC) Acura, BMW (BMWG), and Mercedes-Benz (DAI).
But it would have the advantage, and unique selling proposition, of being the only Italian in the room.