Deep Dive: Volkswagen Scheming To Buy And Transform Alfa Romeo
Before Fiat bought Chrysler, the Italians were attractive potential partners to suitors from all over the automotive world. This appeal was not only recognized by Opel, who later withdrew from the alliance and fell back into the General Motors fold. Around that time, Mercedes-Benz seriously considered Fiat for a strategic alliance like the one they've since entered with Renault-Nissan. On numerous occasions, Volkswagen Group put out their feelers, too, but Ferdinand Piech's squad was primarily interested in Alfa Romeo.
Now that Fiat is digesting Chrysler, it has become too big to swallow, and is probably no longer all that tasty either. But this has not diminished VW's appetite for Alfa Romeo. Quite the contrary: the Germans are closely monitoring what is going on in Turin and Detroit, and they are behind closed doors mapping out strategies for a possible acquisition of Alfa. Although Sergio Marchionne has repeatedly insisted that Alfa Romeo is not for sale, Piech is not known for taking "No" as an answer. But what would VW do with yet another brand at a point in time when overcapacity is a serious threat to the European operations of most volume car manufacturers?
"At a glance, buying Alfa may not make much sense," admits a senior VW official. "But done right, it could be a win-win situation for both buyer and seller. At VW, we would use Alfa to replace Seat. Seat does not know what it wants to be. The fragile brand's value now ranks even below Skoda in most markets and the high fixed costs incurred by high-quality VW componentry will lead the Spaniards exactly nowhere. Alfa on the other hand is a much more valuable commodity, a name you can ask more money for. During the transition, there may be no alternative to badge engineering. But the next-generation Alfas would feature a combination of bespoke styling and VW engineering. While the demise of Seat would go almost unnoticed, the arrival of Alfa would have a big impact on the community and on our group."
This isn't just a pipe dream for VW. According to two independent sources, a small project team has been instructed to create a phantom future Alfa line-up. Yes, three-dimensional stuff, but so far no full-scale models. Of course, this new array of theoretical future products would use architectures conceived within the Volkswagen empire. In a next step, the tentative projects will be reviewed and then passed on to Ital Design in Turin, which is now a VW subsidiary. Italian designers working for an Italian brand masterminded by Germans? Well, both Walter de Silva (group chief designer) and Wolfgang Egger (Audi chief designer) are Alfa Romeo veterans. Christopher Reitz, the chief designer at Alfa until he left the company early this year, is in turn a VW veteran who's distantly related to Piech.
While Alfa under the Fiat umbrella is becoming more of a family-oriented brand destined to add two controversial U.S.-built SUVs to its portfolio, VW would want to steer the marque back to its sporty roots.
In this scenario, Alfas would be built in Italy and in Spain where excess capacity could be used to accommodate the mushrooming demand for Audis. In Italy, Alfa could keep most of its existing labor force, and as far as the sourcing of components is concerned, there are plenty of synergies between the premium brands of Fiat Auto and the still tentative luxury car division within the VW group.
Comments our friend from the boardroom: "Marchionne intends to quadruple Alfa sales by 2014. If this or one of his other key plans falter, we will be there to pick up the pieces."