Alfa Romeo Bets Big on America and Wins

(Bloomberg) -- Alfa Romeo, the Italian brand built (and rebuilt) on 1960s sex appeal, posted the biggest surge in U.S. sales in 2017, an anachronistic result in an industry currently mesmerized by battery packs and self-piloted transportation pods.

The carmaker won its bragging rights the old-fashioned way—through performance. Alfas have curb appeal, powerful engines, and solid engineering.

Make no mistake, auto executives are watching the Alfa Romeo experiment closely. It's not something one sees all that often in the car business these days. Fiat Chrysler assembled a skunk works of marketing gurus and Ferrari engineers and told them to dream big. It also promised to “protect” them from senior leadership—the folks who look for the kinds of parts-sharing, cooperation, and badge engineering that make a contemporary car conglomerate a profit machine. 

The bar for success, of course, is mighty low for Alfa Romeo. The Fiat Chrysler-owned brand has been largely dormant in the U.S. for almost 25 years. In 2016, the marque sold just 528 machines in America. In recent months, however, Alfa launched a sinuous sedan and SUV. Both are made in Italy, both feature carbon-fiber driveshafts, and both brag about “best-in-class” horsepower metrics. The cars have stolen some market share from BMW, Mercedes, Cadillac, and the rest of the luxury set. 

When Fiat Chrysler pledged to resurrect Alfa in America, it promised vehicles with great weight distribution, a lot of horsepower per pound, and mouth-watering design. After all, this is a brand responsible for what some call the sexiest car ever made. According to auto folks, the brand delivered. Motor Trend magazine even crowned the Giulia its Car of the Year.

Meanwhile, Carlock Motor Cars in Nashville has had trouble keeping the Giulia in stock, mostly because it's such a bold offering. Buyers are looking for a particular version, the souped-up TI Sport package, preferably in a bright color. “It was a little counterintuitive for us,” sales manager Mitchell Sherwood said. “They're definitely not buying it in silver with black interior and trying to blend in.” 

Although sales of the cars have been strong, Fiat Chrysler's rivals in Stuttgart aren't likely to be scared. Alfa has just 177 U.S. dealers, roughly half as many as BMW and Mercedes. In the two segments it has nudged its way into, the carmaker still isn't near the front-runners, or even in the middle of the pack. Among entry-level luxury sedans, the Giulia captured only 2 percent market share in the recent quarter. 

“We want to make sure we earn our position in the segment,” said Pieter Hogeveen, Alfa's director in North America. “It's not just chasing sales numbers for us.” If Alfa Romeo can keep convincing enough drivers it's special, it will have the pricing power to tune up its profit metrics.

Indeed, the brand's renaissance in the U.S. has helped shore up Fiat Chrysler's profit, even as sales skidded at sibling brands Chrysler and Jeep. Alfa may never be big enough to carry the company's dead weight, but what it lacks in size, it makes up for in style.

To contact the author of this story: Kyle Stock in New York at kstock6@bloomberg.net.

To contact the editor responsible for this story: Josh Petri at jpetri4@bloomberg.net, David Rovella

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