Marchionne pulls back Alfa Romeo projections for China – Detroit Free Press
Fiat Chrysler CEO Sergio Marchionne’s plans for growth for the Alfa Romeo and Maserati brands may not as strong as hoped.
Marchionne said last week the growth plans for Alfa Romeo and Maserati must be re-evaluated in the wake of China’s more restrictive import policies, proving once again that it is dangerous for automotive executives to publicly disclose ambitious sales targets.
“I still think that Alfa belongs in China,” Marchionne told Wall Street analysts on Wednesday. “The expectations of volumes out of the total pool of 400,000 cars by (2018) are, I think, given current market conditions, not achievable.”
It’s a lesson that executives at General Motors, Volkswagen and other automakers have also learned the hard way.
In 2012, former GM CEO Dan Akerson had to back off his goal to sell 45,000 Chevrolet Volts that year and former Volkswagen CEO Martin Winterkorn’s goal of selling 800,000 cars annually in the U.S. by 2018 now looks nearly impossible in the wake of the automaker’s diesel engine software scandal.
“The practice of putting sales targets out is often a faux paus for automotive executives,” said Dave Sullivan, an automotive analyst with AutoPacific. “You can’t always predict what is going to happen on a global scale.”
It was Marchionne’s turn Wednesday to begin laying the groundwork to dial back back expectations for Alfa Romeo and Maserati.
In 2014, when the company disclosed its strategic plan, Marchionne set a goal of selling 400,000 Alfa Romeo and 75,000 Maserati vehicles annually by 2018, up from 68,000 and 36,500 respectively in 2014.
Marchionne said Maserati’s sales will get a big lift next year when an SUV, the Levante, is launched but said it will take some patience to build that brand’s sales steadily through 2018.
FCA still plans to spend 5 billion euro ($5.5 billion) by 2018 to launch eight new Alfa Romeo models in a bid to make the sporty premium brand a true competitor with the likes of Audi, BMW, and Mercedes-Benz.
The first of those models — the Giulia — was unveiled in June in Milan.
“The Giulia represents the beginning of the rebuilding of the Alfa Romeo brand,” Marchionne said.
But with falling demand for imported cars in China and regulatory scrutiny increasing, Marchionne said the automaker can no longer count on the world’s largest automotive market for the same annual sales volume he once hoped for.
“I think that the import function into China is going through a fundamental change and this has got a bunch of ramifications in terms of our expectations going forward,” Marchionne said. “A relatively significant portion of our volume ambitions for 2018 for Alfa were China-driven.”
Now, Marchionne said the schedule of the cars and SUVs the company plans to develop for Alfa Romeo is “going to require a re-jigging” to better appeal to consumers in North America and Europe to extract more sales out of those markets.
Sullivan said most analysts thought the goal for Alfa Romeo was a long shot even before the outlook for China began to look grim.
“I think anybody would have been impressed with 200,000,” Sullivan said.
Contact Brent Snavely: 313-222-6512 or firstname.lastname@example.org. Follow him on Twitter @BrentSnavely.