Fiat Chrysler’s ambitious plans for Alfa Romeo, which included boosting sales of the brand to 400,000 units by 2018, is looking increasingly shaky as China’s economic slowdown wears on, The Wall Street Journal reports.
The revival of Alfa Romeo was a critical part of FCA CEO Sergio Marchionne’s ambitious five-year plan to boost FCA worldwide sales from 4.4 million in 2013 to 7 million by 2018. That plan was referred to as “fantasyland,” by Sanford C. Bernstein & Co. analyst Max Warburton, and with recent product delays at Alfa and a slowing car market, it’s beginning to look more and more tenuous.
As WSJ points out, FCA currently relies on Jeep to bankroll its business and gain market share as its other brands, like Alfa, lag behind. Additionally, the automaker’s profit margins are 40% lower than that of crosstown rivals Ford and General Motors and it’s currently sitting on 86 days worth inventory in the U.S. – 50% higher than the industry average.
The launch of Alfa Romeo’s latest model, the Giulia, was pushed back to later this year in Europe and 3 to 6 months after that in the U.S. Adding salt to the wound is the fact that the launch of its much-anticipated crossover has also been pushed back to 2017, nine months later than originally planned.
Marchionne has responded by taking the $5.46 million he planned to invest in Alfa Romeo through 2018 and spreading it out over an additional year or two. This will allow the company to prevent over-spending as it gauges the Chinese market, however it’s also caused doubts within the industry that the Giulia and other new Alfas will arrive at all.