Can Alfa Romeo Be Stellantis's Viable Premium Brand in U.S.?

When it comes to premium and luxury car shopping in the U.S., buyers tend to think German and Asian brands first, Detroit and Tesla EVs second and perhaps British third. The Italian brands, like Maserati and Alfa Romeo, tend to draw more eyeballs at Concours D’ Elegance events and auctions than they do on car-buying sites or in Consumer Reports.

Now that the conglomeration of Stellantis has had time to jell following the mash-up of Peugeot and Fiat Chrysler, though, and auto sales are on a track to re-normalize after the worst of the COVID-10 pandemic, the French-Italian-American house of brands is putting its luxury chips firmly in the hands of the Italian brands that historically have never had more than boutique status in the U.S.

One wonders what the legendary Chrysler CEO Lee Iacocca would think of the European ownership of Chrysler, Jeep, Dodge and Ram, and its plans to back Alfa Romeo and Maserati going forward. It was Iacocca, a proud Italian-American with a fondness for opera windows and button-tufted upholstery on his New Yorker and Fifth Avenue sedans, who tried to buy Alfa and invested in Maserati, and even produced a dog’s-dinner of a car, called Chrysler TC By Maserati, which was a K-car modified in Milan by the Italian design studios and ultimately involved a Mitsubishi engine, Cosworth cylinder heads and a Getrag gearbox.

Alfa Today in the U.S.

Alfa Romeo in the U.S. today has 135 dealerships in the U.S. Florida is the biggest state for the brand with 19 sales points, or 14% of the whole. And they must be good dealers because Alfa topped the J.D. Power Sales Satisfaction Survey this year, beating traditional leaders including Lexus and Cadillac.

Sales in 2021 were 18,250, according to Wards Intelligence, which shows the 135 dealers sold an average of 135 vehicles, or 11-12 per month per sales point. That is down to about 85 vehicles per point this year based on sales through November.

On the negative side of the ledger, Alfa Romeo ranks near the bottom of Power’s Initial Quality Survey and Vehicle Dependability Survey. Quality problems are dominated by axle and suspension, which account for 26% of complaints, with electrical faults 18% of complaints, according to U.K. firm OSV Vehicles & Motoring.

Tonale Is Brand’s First Step Toward BEVs

When Alfa introduces the Tonale plug-in hybrid in 2023, it will be an important building block to both put the brand on more solid footing and convert the whole Alfa Romeo showroom to BEVs by 2025. ”Originally we were going to bring in Tonale with an ICE engine, as well as the PHEV, but we feel we can focus the message and attention better by just offering the PHEV and preparing customers for the 100% BEV future,” Vincent Noirbent, vice president of marketing and product for Alfa Romeo North America, says during one of several regional briefings the brand has given in recent months.

The Tonale’s 275-hp drivetrain combines a 177-hp, 1.3L gasoline 4-cyl. with a 122-hp (90-kW) electric motor. The electric motor improves the CUV’s fuel economy and lowers its CO2 emissions to 26-33 gm/ km. The Tonale gets the equivalent of 75 mpg (3.1 L/100 km).

The Tonale is built on the FCA Small Wide platform, which also underpins the Jeep Compass and Renegade. It will be built in Stellantis's factory in Pomigliano in southern Italy. The Tonale has an unlikely sister model in the forthcoming Dodge Hornet, which will get a non-hybrid 2.0L engine as well as the same plug-in drivetrain as the Tonale.

What Is Italian for “slog”?

But reviving the 112-year-old Italian brand is going to be a tough slog. “How to establish Alfa Romeo in the States is a hardy perennial,” says Chris Theodore, former head of platform engineering at Chrysler under Iacocca and product development chief at Ford. Theodore loves the brand and history but says the business case for Alfa Romeo is as steep as Mt. Vesuvius. “U.S. buyers don’t really know what Alfa Romeo is, and that only changes with investment and marketing consistency over a long period of time.” Whether Alfa's legacy of romantic sports cars with current enthusiasts translates to sales of electric crossovers and SUVs that look like a lot of other crossovers and SUVs the way Porsche has done will only be solved with time and superior products.

Theodore points to two brands already fighting for a foothold in the U.S. to spotlight the difficulty. Jaguar has never left the U.S. market under ownership by Ford and now India’s Tata Motors. Jaguar sold 31,005 vehicles in 2019, a minuscule 0.18 share, and was down to 7,125 and a 0.06 market share through November. Genesis, Theodore, notes, was created in 2015 by Hyundai Motor Group and will sell over 50,000 vehicles this year, “but they are overspending, and I’d bet losing money while they build credibility and awareness. But they are clearly committed to the plan.”

Noirbent says Stellantis CEO Carlos Tavares is making the Alfa group earn its way step by step. “He has made it clear that we need to prove a return on investment on everything we do…we have to succeed with the investment we have before we get additional investment," says Noirbent.

The Alfa marketing plan calls for focusing on one word, “sporty.” Indeed, Alfa Romeo has always stood for sports cars, so leaning into what people know appears logical..

The Tonale and Hornet are similarly styled, and built on the same platform, but will be priced very differently. The Tonale will likely sticker close to $60,000. The Hornet’s pricing has not been released, but will likely be considerably lower. That puts a lot of pressure on Alfa Romeo’s marketers to burnish the Italian sportiness imagery and convince consumers that an Italian brand matters when there is a near twin running around with a Dodge badge.

Alfa Romeo will benefit from the scaling of BEVs at Stellantis from the standpoint of cost. Stellantis is using four electrified platforms across its 14 global brands to cover small, medium and large cars.

The plan is for Alfa Romeo to be 100% BEV worldwide by 2027. And by 2030, the output from the Alfa Romeo design studio is expected to  include a D-sedan, D-CUV, B-SUV, D-SUV and a supercar, with special derivatives of most of the vehicles. Which of those will migrate to the U.S. is to be determined. But dealers are encouraged by the fact that BEVs are much easier to qualify for multiple markets than ICE vehicles. The current versions of the Giulia and Stelvio are being phased out.

The future for Alfa Romeo on paper is bright. But Stellantis has yet to make its case to consumers who are going to be faced with a wealth of BEV choices from Asian companies – including new entrants – as well as Detroit, Germany, Tesla and a steady flow of start-ups.

Italian for “tough slog” is “Battuta dura,” according to Google Translator.