The new D-segment challenger will be key to the company's US re-entry, although we expect a struggle in making a significant market share gain from the German big-three premium OEMs.
IHS Global Insight Perspective | |
Significance | Alfa Romeo is close to finalising the design and specification of the new Giulia D-segment model on which it is depending to revive its fortunes in its heartland market of Western Europe and lead its re-entry into the US market. |
Implications | The model will lead Fiat's latest attempt to properly leverage the famous Alfa Romeo brand and try to make inroads into the dominant market share of the big three German brands. However, this is the latest in many attempts to revive the brand and every aspect of the Giulia must be right if is it to help meet Fiat's ambitious sales targets. |
Outlook | Fiat CEO Sergio Marchionne is correct in thinking there is huge potential in the Alfa Romeo brand and the 2014 launch of the Giulia will be the most important development in realising this potential. Fiat must ensure that potential buyers who might like the idea of Alfa Romeo but would baulk at actually buying one are converted into actual buyers; to do this not only will the Giulia need to be a winner, but the company will need to revitalise other aspects of its operations, including dealerships and servicing networks. |
Alfa Romeo is about to freeze the specification and design of its new D-segment contender, the Giulia, which the owners Fiat Group hopes will revitalise the fortunes of the brand and lead the company's long-awaited reintroduction to the US market, according to reports in Car Magazine and Autocar. Fiat CEO Sergio Marchionne believes that Alfa Romeo and Maserati are the brands with most potential for volume growth and boosting the overall reputation of the Group, and the Giulia will be absolutely key to Alfa Romeo's future. The model will be launched alongside the new 4C mid-engined sports car in 2014, with a new Spider model also being introduced in 2015, with a three-pronged model strategy to boost the company's image and volumes. The Giulia will be the real volume driver, and will be expected to make inroads in the high volume and profit generating premium D-segment, which is dominated by the Big Three German OEMs in the form of the BMW 3-Series, Mercedes-Benz C-Class and the Audi A4.
The model will be built in a new front-wheel drive platform and will be launched first in sedan form before the Sportwagon version is launched a few months later. The entry-level model will have a 1.4-litre MultiAir 120bhp powertrain, while other versions will be powered by a series of new turbocharged gasoline (petrol) engines exclusive to the Alfa brand, including an updated version of the highly regarded 1750 TBi powertrain which has previously been used in the now discontinued 159 and Brera model range. The model will also be available with a variety of Fiat Group powertrains and as well as a new range of engines which will not be available in Fat branded products. This will include a new MultiAir version of Chrysler's latest Pentastar gasoline V-6, although it is possible this version will not be included in the European range offering, according to the Autocar report. The Guilia's platform architecture will be absolutely key to the model's fortunes, as handling, ride and general dynamic sophistication are a big priority in this highly competitive segment, with the new F20 BMW 3-Series widely regarded as being the benchmark in this area. The Giulia will reportedly use a re-engineered version of the Compact platform that underpins the C-segment Giulietta. Fiat says 90% of the platform is made up of "high-strength" materials, such as aluminum-strengthened parts in the front of the module to improve torsional rigidity.
Outlook and Implications
One area which really will seal the car's fate in terms of its success in the market is its styling. Alfas are generally known for their sleek and sophisticated styling and it customers expect it as a given that an Alfa will look good. While the Giulia's predecessor, the 159, was generally regarded as a attractive car, it lacked something in the areas of road presence and stance, and these are areas the Giulia's designers will have to concentrate on. The 159's mediocre dynamics and less than cutting-edge range of powertrains combined to see the model perform averagely in terms of sales. Given this was just in the European market and the 159 was not charged with spearheading the Alfa Romeo brand in the US, it gives an indication of quite how much of a step forward the Giulia will have to be if it is to help achieve the Fiat Group's overall goals for the brand. If it is to have any hope of helping Alfa Romeo take market share from BMW, Audi and Mercedes-Benz in the D segment in Europe and the US, the Giulia (the name given internally the project but not officially confirmed for the model yet) will have to be a quantum leap forward in the areas of quality, styling, powertrain efficiency and overall dynamic prowess. The model will have to be right in all of these areas if it is to spearhead the return to the US of the brand, which is scheduled to coincide with the Giulia's launch in 2014 (see United States: 3 July 2012: Plans for Alfa Romeo's Return to US Market Begin to Solidify—Report). The continual failure of Alfa Romeo to maintain volume growth and become a kind of "Italian BMW" has been one of the conundrums of the European industry for many years. The brand's potential has never been in doubt, as witnessed by the Volkswagen (VW) Group's long-standing interest in the brand, but in truth it has fallen just short in the product stakes in recent years, as Fiat has struggled to fund the development of a wide and competent enough model range, despite some notable successes such as the 156. In order to make a compelling case Fiat will not only have to oversee the development of an unprecedentedly competent range of new cars, in the form of the Giulia, 4c sports car and Spider, it will also have to vastly improve other areas in which the brand has traditionally been weak, namely the customer experience at its dealerships and servicing networks. This will require considerable funding and management resources but will be entirely necessary if Fiat is to realise the potential of the brand. At the moment IHS Automotive forecasts that there will be a considerable uplift in sales as a result of the Giulia's launch and the US market entry in 2014, with sales peaking at over 250,000 units in 2016, up from a forecast combined total of 107,000 units for this year. However, we foresee an uphill struggle in building on this total and for combined volumes to plateau until the end of the current decade. Of this total we see around 15 to 18% of combined global volumes to be generated in the US.