Fiat aiming to tap Chrysler funds for Alfa Romeo revival

Fiat’s CEO says the Italian automaker is committed to the future of one of the industry’s most historic and romantic brands, Alfa Romeo. But any sort of revival is on hold until the Detroit union that holds a stake in Chrysler agrees to sell Fiat its share.

Such a move would help Fiat fund new Alfa Romeo-badged products. As it is, Alfa’s lineup consists of a curious array of small hatchbacks hardly fitting with its historical image or its plans to re-enter the U.S. market, plus a new, limited-run sporty car.

Fiat chief Sergio Marchionne is sparring with the United Auto Workers’ health care trust known as VEBA, which owns the remaining stake in Chrysler. Since helping the governments of Canada and the United States and VEBA to bail out Chrysler, Fiat has been acquiring shares in the Detroit automaker.

Not only has that given Fiat access to Chrysler’s distribution in the U.S., the two automakers have begun sharing platforms and technologies. And that’s worth mentioning since Fiat is also after Chrysler’s cash, the same thing Germany’s Daimler wanted more than a decade ago when it completed its controversial “merger of equals.” In this case, Fiat’s intentions seem, at least on the surface, to be far more genuine, although that isn’t stopping the UAW from being concerned that the Italians will raid Chrysler’s savings. 

Yet Fiat faces an uphill battle to get its Italian operations off the ground. Sales of even its mainstream Fiat division are sputtering, but it is Alfa Romeo that has been hit especially hard. Fiat ratcheted down its 2014 sales forecast from 500,000 to 300,000 units, but analysts at IHS Automotive estimate the brand may deliver just 81,000 cars next year.

“If Marchionne really wants to relaunch Alfa Romeo, he needs Chrysler’s cash,” said Bocconi University professor Giuseppe Berta, the former director of Fiat’s archives, in a conversation with Bloomberg. “The carmaker has to invest billions of euros in the brand as VW did with Audi.”

VW took Audi from also-ran to heavy-hitter over the course of about a decade. During the first nine months of 2013, VW sold almost 1.2 million Audis globally.<![CDATA[
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