Alfa Romeo brand is still losing money but Fiat CEO Sergio Marchionne wants a chance to fix it.
Fiat CEO Sergio Marchionne has thwarted the advances of Volkswagen, which is interested in buying the troubled Alfa Romeo brand from the Italian automaker, and said that his Alfa Romeo division is not for sale.
Last month, Ferdinand Piech, chairman of the supervisory board at VW, said the German automaker is interested in buying Alfa Romeo.
Marchionne wants to hold onto Alfa and try to fix it and has plans to bring the brand back to the U.S. market and grow its sales. Fiat believes it needs to sell around 300,000 Alfas in order to make the brand profitable and Marchionne hopes to reach that goal by 2013. Alfa Romeo sold just 80,000 cars in the first 9 months of 2010.
But Marchionne wants to take sales to 500,000 units a year by 2014, with 85,000 of those in the United States. In 2012, the brand plans to return to the United States market with the Guilia sedan and an SUV it's building with American partner Chrysler. Some analysts think those sales targets are unrealistic. Fiat needs to invest billions in Alfa Romeo and does not have much time to decide to sell it.
By one analyst's estimate, the Alfa Romeo brand is costing Fiat about 300 million euros ($416 million) a year in losses but Fiat does not release earnings data on the Alfa division.
Marchionne believes that having a near-premium brand like Alfa Romeo is essential for Fiat's future success as a company.
"Alfa Romeo is the only possibility for Marchionne to compete in the high-price segment. It's a long-term project. In the short run, he has no chance of meeting the targets," said Marco Santino, a consultant with A.T. Kearney in Rome.