Fiat Takes Alfa Romeo for a U.S. Test Drive

Almost 25 years ago, Lee Iacocca, who guided Chrysler from the brink in the early 1980s, proposed opening Chrysler dealerships to Fiat's Alfa Romeo, the Italian brand made famous in the U.S. when Dustin Hoffman's character pursued Mrs. Robinson and her daughter in a Spider roadster in . That deal wasn't inked until 1988 and fell apart just three years later, precipitating Alfa's exit from the U.S. in 1995. Now Sergio Marchionne, chief executive officer of both Fiat and Chrysler, wants to bring Alfa back to the States as a linchpin of his strategy to make a global auto giant out of his two struggling regional players.

Marchionne's vision is to remake Alfa into a true luxury brand, like BMW, with a lineup of models ranging from high-end compacts to sport-utility vehicles to sports cars. Backed by the scale of the mass-market Fiat, Dodge, and Chrysler brands, the century-old Alfa would spin off outsized profits for the group in the same way hot-selling Audi does for its parent, Volkswagen. Although VW owns 10 brands, luxury-priced Audi accounts for almost half its earnings.