Reports are saying that Marchionne has every intention of holding on to Alfa Romeo despite the brand losing $416 million a year, an estimate made by Max Warburton, a Sanford C. Bernstein analyst in London.
Fiat has already invested 2 billion on the brand and Marchionne still has plans of reviving Alfa Romeo. One of the moves he has made in doing so is bringing the car back to the US beginning in 2012 with the Giulia sedan and another SUV that the company is building in collaboration with Chrysler .
Yet despite the moves that are being made, it’s still a far-fetched assumption to think that the brand can sell 300,000 units a year by 2013 – Marchionne’s benchmark – especially when you consider that in the first nine months of this year, Alfa Romeo has sputtered to meet 80,000 units.
Continued after the jump.
A big reason as to why Marchionne is holding on to Alfa Romeo amid the strong interest from Volkswagen is that the brand is the only way Fiat can make a dent in the high-end car segment. Marco Santino, a consultant with A.T. Kearney in Rome, thinks that the project of reviving Alfa Romeo isn’t a short term deal, but one that should take the look of a long-term project. “In the short run, he has no chance of meeting the targets,” the consultant said.
Volkswagen supervisory board Chairman Ferdinand Piech has said that the company is willing to take Alfa Romeo off of Fiat’s hands, but the offer has been continuously rebuffed by Marchionne. Whether it’s the right move or not remains to be seen and Fiat is going to have to squeeze every ounce of patience they have in their bodies to wait for Alfa Romeo to turn the corner.
Otherwise, they’d be wasting a perfectly good opportunity to strike while the interest in the brand is still hot.