Alfa Romeo Plans Delayed Due to Spending on New Jeeps

Blame China’s economic slowdown and a shift in capital expenditures to Jeep as the key reasons Fiat Chrysler Automobiles has delayed its Alfa Romeo revival by at least two years, to 2020.

“Our commitment to the overall brand strategy remains in place” for Alfa Romeo, said FCA CEO Sergio Marchionne, Wednesday, in an investment analysis conference call following FCA’s announcement of a net fiscal year 2015 profit of 377 million euros [$408.9 million].

FCA 2016 Business Plan Alfa Romeo Update

The updated timeline for Alfa Romeo.

Alfa Romeo’s new, flexible rear-wheel-drive platform, which underpins the BMW 3 Series-size Giulia sedan that goes on sale by the middle of this year was to have been the first of eight new models launching by calendar year 2018. In an update of FCA’s May 2014 five-year plan, Marchionne announced the Alfa rollout would be delayed a couple of years, to calendar 2020.
In that May 2014 plan presentation, Marchionne indicated Alfa would share the new RWD platform with Dodge, which is expected to use it for new, downsized versions of the Charger and Challenger. A Barracuda convertible, smaller than the Challenger, also is rumored to be in the works.
Neither the original plan nor Wednesday’s update was specific about the exact years of each new Alfa model’s rollout, except for a midsize utility vehicle now planned for this year or next year (it’s listed as “2016/17”). Maserati’s new Levante crossover/utility vehicle is scheduled to go on sale in the second quarter of this year, Marchionne said.

Wednesday’s update lists, in order, a full-size car, two more utility vehicles, two “specialty” models and a hatchback appearing in the 2017 to 2020 timeframe.

FCA’s priority placed on the 2016/17 midsize Alfa SUV points to the main reason for the product delays; shifting capital expenditure on getting new Jeep utility vehicles, including a Wrangler-based pickup truck, on the market as soon as possible. FiatChrysler also has an expensive new Jeep Grand Wagoneer in the works that is designed to compete with the Land Rover Range Rover.

“There has been a permanent shift to [utility vehicles] and pickup trucks,” Marchionne said, in summing up the U.S. market.

In earlier comments, he noted that the “primary focus of development for Alfa is going to be NAFTA,” the North American Free Trade Agreement markets of the U.S., Canada and Mexico.

“There are no defeat mechanisms, devices, in our vehicles,” Marchionne said, in defense of FiatChrysler’s diesel-powered models. The hybrid and diesel powertrains in upcoming Jeep and Ram products are designed to help FiatChrysler meet strict CO2 emissions and U.S. Environmental Protection Agency Corporate Average Fuel Economy standards. The company has been relying on purchasing credits from cleaner brands such as Tesla, to meet various standards.

2017 Chrysler Pacifica Hybrid Side

“More than half our fleet is going to be hybrid,” Marchionne said. Think of “hybridization as a way of life.”

He said the U.S. EPA may relax the 2025 56.5-mpg CAFE standard, but “only in terms of timing.” A break for automakers “will not make the situation go away.”

Uncertain future for two sedans
FiatChrysler’s reliance on UVs and pickup trucks also spells doom for the Dodge Dart compact and Chrysler 200 midsize cars sold in NAFTA. The two sedans will not be replaced with next-generation models when their lifecycles end, Marchionne said, though he hopes to find an automaker partner to build new versions. If FiatChrysler has such a partner lined up, it’s not saying. Potential partners could include Nissan, which has ample manufacturing capacity in Smyrna, Tennessee, and Mazda, which provides the platform and assembly of the new Fiat 124 Spider, and which has a new plant in Mexico where it builds the Mazda2, Mazda3 and Scion iA.

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