The Alfa Romeo brand might be sold by people from Fiat, sources say, announcing negotiations between Volkswagen and the Italians. Apparently, it all depends on Sergio Marchionne.
Sources cited by AutomotiveNews suggest that Sergio Marchionne oscillates between keeping and selling Alfa Romeo. The head of the Italian brand is going through an unprecedented internal battle, after which he must decide if he prefers abandoning the tradition and obtaining a significant sum of money or striving to put the famous Milan brand back on its feet. Ferdinand Piech has publicly expressed its intention to buy the Alfa Romeo brand and Volkswagen said they are the only vendor that could get the Milanese brand out of debt.
Subsequently, Sergio Marchionne said he wants to keep the Alfa Romeo. Some sources said that Volkswagen and Fiat have been secretly discussing about a possible sale of the Alfa Romeo brand for almost four months, but Sergio Marchionne has not yet decided. On the one hand, Alfa Romeo is part of Fiat Group’s strategy for the future, but the brand is rarely mentioned in these plans. More specifically, although the Italians were considering closing the Lancia brand and selling products under the Chrysler logo, they have subsequently decided to sell Chrysler models in Europe under the Lancialogo, an exception to the rule being the UK market.
Alfa Romeo brand had to sell some Dodge models, but the situation was not publicly completed until present, with the only link being the United States with Chrysler and Jeep models. Alfa Romeo is Marchionne’s biggest failure, as it was unable to get any profit during the last six years. Furthermore, there are chances that Alfa Romeo has not recorded any profit in the last ten years. Sales in 2010 exceed 120,000 units only, not even half the 300,000 the Italians foreshadowed. Moreover, Marchionne said he has a plan to increase sales to 500,000 Alfa Romeo units per year until 2014, but market analysts are skeptical.
WHAT WOULD HAPPEN IF FIAT SELLS ALFA ROMEO
If Fiat sells Alfa Romeo, they will get between 1.5 and two billion euros. Besides, they make a saving estimated at 1.5 billion euros in development costs, since it will have to launch five more Alfa Romeo models in the period 2012-2014. Fiat Group’s profit would increase in the years 2011 and 2012 by eliminating the losses represented by Alfa Romeo. In addition, the Dodge brand could be reintroduced as a sports brand in Europe and would do so without overlapping Lancia.
IF FIAT DOESN’T SELL ALFA ROMEO
On the other hand, if Fiat keeps Alfa Romeo, they will have a better margin profit in 2014 and will be able to pay all debts until then. Also, by selling Magneti Marelli, Comau and Teksid, Fiat could get the same amount of money they would get from selling Alfa Romeo, and investors would be happy, some analysts believe. In addition, the relaunched version of the Alfa Romeo brand would have a margin profit of around 10 percent. Thanks to this, Fiat could get an annual operating profit of 3.5 billion promised by Marchionne until 2014. The Fiat-Chrysler alliance would save money by using multiple Alfa Romeo platforms and the corporation could enter more firmly on the Chinese and Russian markets. If they keep Alfa Romeo, Fiat would no longer be constrained to obtain profit from a segment with an extremely low profit margin given the low purchase price.
Source: AutomotiveNews (înreg.); Carscoop
Image source: seriouswheels.com