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Fiat Chrysler is taking a five billion euro ($5.6 billion) gamble with storied but troubled sporty subsidiary Alfa Romeo, empowering it to beat the Germans at their own premium game and lead the merged company into a successful and high profit-margin future.

That’s the plan, and the unveiling of the new Alfa Romeo Giulia sports sedan later this week is its first chapter.

The trouble is, nobody seems to think the Alfa Romeo revival plan stands much chance of succeeding. At best only parts of its plan — overall sales of 400,000 by 2018 with 150,000 in the U.S. — will be achieved. Some say it will crash and burn early.

And as for FCA’s overall target of selling seven million cars by 2018, that could end up nearly two million vehicles short.

But the spotlight this week is on Alfa Romeo and the new Giulia. This must not only be at least as reliable as a BMW 3 series, Mercedes C class, Audi A4 or Jaguar XE, but sportier, cuter, cheaper and more interesting to lure buyers away from established leaders. The top-of-the-range Giulia reportedly will have a 510 hp V-6 twin turbo-charged gasoline engine based on a Ferrari and Maserati design. That sounds as though it might grab the attention of sports sedan enthusiasts at least for a while.

There seems to be nowhere to go but up for Alfa Romeo, which sold a mere 68,000 cars last year, and has lost an undoubtedly huge but undisclosed amount of money over the last 20 years. It withdrew from the U.S. market in 1995.

Max Warburton, analyst with Bernstein Research, doesn’t hold out much hope for Alfa Romeo.

“Is this the beginning of a genuine rebirth of the brand with a profitable future? Or is the Alfa plan just vaporware?” Warburton wonders.

Vaporware describes products announced and promoted, but never actually appearing in stores.

Analysts dubious

“While the product may look spectacular, we remain unconvinced that it will be followed by a significant expansion of the model range,” Warburton said. “We’re dubious that FCA will invest the ($5.6 billion) in Alfa that it has promised. We believe the distribution network remains insufficient. We doubt that FCA will meet its volume targets for Alfa.

“Talk of a dramatic improvement in FCA profitability, driven by Alfa – or attributing a big value to the brand – is misguided in our view. Despite our love of Alfa’s past, we’re unconvinced by its future.”

Milan, Italy-based IHS Automotive analyst Pierluigi Bellini agrees the Alfa Romeo plan is risky and the sales targets too high.

He sees total sales of 220,000 by 2018 with 45,000 in the U.S. As for FCA’s overall 7 million target for 2018, he believes this will reach 5.1 million, rising to 5.5 million by 2020. The hugely ambitious new Alfa Romeo model plan will be met in full, he says, but at a slower pace. After the Giulia will be a full-sized sedan, two SUVs, a coupe version of the Giulia and a roadster, and two smaller models replacing the current Giulietta.

Rear-wheel drive

“These will all be rear-wheel or all-wheel drive, no front-wheel drive. That’s a bit risky but at the same time a strategy for creating premium, performance niche cars. I think this is a last resort to try and relaunch Alfa Romeo,” Bellini said. “If they fail, that will be it (for Alfa). There will be no more attempts. It’s a big gamble to try and bring in all rear-wheel drive, it’s all a bit risky going against what the industry is doing now. We’ll see if (FCA CEO Sergio) Marchionne was right. He’s said he doesn’t want all of BMW’s sales, but just a bit of it with these purely performance cars.”

Professor Ferdinand Dudenhoeffer from the Center for Automotive Research at the University of Duisberg-Essen doesn’t have much time for the Alfa Romeo plan.

“I don’t believe in the plan because they (Alfa Romeo) have come up with quite a lot of plans in the last five years. Where are they going to sell 400,000 cars? The competition is very strong from Jaguar, Land Rover and the Germans,” Dudenhoeffer said.

He did concede that maybe 200,000 in annual sales was possible.

Dudenhoeffer thought the fact that Marchionne has been scouring the world for a merger candidate or alliance partner reflected the weakness of FCA plans for the future.

Another week, another approach

“Marchionne has been looking for new partners. I think he approaches another carmaker each week seeking to merge, otherwise he would invest and go straight to the plan. But it looks as though he doesn’t believe in his own plan,” Dudenhoeffer said.

Bernstein Research’s Warburton doesn’t believe the timescale for Alfa Romeo’s plan is credible and reckons it has only two new products in development, not eight.

The development of the Giulia has been cloaked in secrecy, with a special team working at the Modena, Italy, home of Ferrari and Maserati, cut off from the regular research team in Turin.

“Fiat has product development assets in Turin – so why duplicate it in Modena? Is the skunkworks strategy designed to hide a huge secret engineering program – or obscure a very modest one?” Warburton said.

Warburton believes Alfa only has two products in development, based on contacts with German and Italian sources. He also doubts the sales targets because the product range envisioned can’t support it, citing Audi in the U.S and Infiniti. Audi sells 180,000 a year with over 20 models. Infiniti sells 120,000 with about 10 models.

Inadequate sales network

“It seems inconceivable Alfa could hit its North American target with two or three cars. The products would need to be dramatically better than rivals to deliver such growth – but from what we know, they don’t look unique or innovative,” Warburton said, adding that the distribution network in either the U.S. or Europe is inadequate.

But despite its past failures, Alfa Romeo has never been short of admirers, led by former Volkswagen board chairman Ferdinand Piech, who openly discussed his admiration for the idea of Alfa, and how he would like VW to own it one day.

Perhaps that will be enough to give Alfa Romeo that crucial edge to convince potential buyers to desert the Germans.

IHS Automotive’s Bellini puts it this way:

“It’s a bit of risky strategy but the only one left for Alfa to survive. Can the quality of assembly match the Germans? We’ll see. They are trying to make it high quality and then we’ll find out if Marchionne is right. The unbelievable thing about Alfa Romeo is it still has strong brand awareness around the world, despite two decades of mismanagement. There’s a wealth of goodwill if they can get at it.”

Neil Winton, European columnist for Autos Insider, is based in Sussex, England. Email him at mailto:neil.winton@btinternet.com

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