Marchionne’s Risky Gambit: Bet Everything On Alfa

"It may require a miracle to pull off the Fiat chief's latest gambit," Reuters writes. To get Fiat out of its rut, Sergio Marchionne has a risky plan: "Take his sporty Alfa Romeo brand global with more expensive models and triple its sales volume by 2016 – after years of losses." That plan, says Reuters, "represents Fiat's only real hope of combating a collapse in its home market and breathing new life into idled factories." What if it turns out as a bust? "Should it fail, and the new cars flop, the company that Italians view as a cornerstone of their economy will have little choice but to put thousands of employees out of work and tip entire communities into turmoil." Reuters and analysts are shaking their heads: The new Alfas will be built in Italy, where labor and material costs are far higher than in the United States, Asia or Eastern Europe. "Get it wrong, or find consumers aren't interested, and it will be a financial catastrophe," says Bernstein analyst Max Warburton. Barclays Capital: "It's not the first time we have heard an ambitious volume plan for Alfa, Volumes were supposed to be 400,000 in 2014 rather than the 70,000 that seems likely." LMC senior analyst Joseph Langley: "Alfa is going to have a fight on its hands in luring luxury buyers into its vehicles, Charging a premium and leaning on heritage is not enough in the highly competitive luxury segments, as Cadillac and Lincoln have experienced." from The Truth About Cars http://www.thetruthaboutcars.com

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