Milan: Alfa Romeo, the sports car brand made famous in the US fifty years ago by Dustin Hoffman’s stylish convertible in The Graduate, is trying to revive its appeal with Americans and improve profitability by introducing its first sport utility vehicle.
The mid-sized Stelvio, which aims to deliver on the company’s long-standing promise to challenge luxury rivals including BMW AG, will debut at the Los Angeles Auto Show on Wednesday. The Stelvio is vital to Alfa Romeo parent Fiat Chrysler Automobiles NV’s plan to sell higher-margin, upscale cars and comes as auto sales in the US, Fiat’s biggest market, start to slip after six straight years of gains.
“The Stelvio has all the ingredients to eventually become Alfa Romeo’s best seller,” said Ian Fletcher, a London-based analyst for IHS Automotive. “To do it right, the SUV should really feel like a premium product with an Italian flair.”
Fiat chief executive officer Sergio Marchionne wants to rebuild Alfa Romeo’s upscale reputation after its line-up shrank and sales collapsed, and previous attempts to expand beyond Europe were delayed. The Stelvio’s American debut is critical to the brand’s revival, especially as the Italian automaker, which generates the lion’s share of its profit in North America, is bracing for slowing growth in the US by shifting production to higher-margin pickup trucks and SUVs.
Named after the highest paved mountain pass in the Eastern Alps with dizzying hairpin turns, the Stelvio is due to hit shops next year and will compete in a crowded segment of mid-sized SUVs dominated by the best-selling Audi Q5 and BMW X3. It’s likely to be priced in the same range as its rivals, which typically start at around $40,000.
The Stelvio is Alfa Romeo’s third US offering, following its re-entry into that market two years ago with the 4C sports car, and the ongoing rollout of the mid-sized Giulia sedan.
As part of a new eight-vehicle line-up that’s due by 2020, two years behind schedule, Alfa Romeo may unveil a station-wagon version of the Giulia at the end of next year and also expects to release a new full-size flagship sedan in 2018.
While the Stelvio and Giulia may boost Alfa Romeo’s global sales—by more than 60% in 2017 to about 140,000 cars, according to an IHS forecast—the brand remains a niche player. BMW and Mercedes-Benz, by contrast, are each expected to sell about 2 million cars next year.
Unveiling the Stelvio in Los Angeles shows how important Fiat considers the US market to be for Alfa Romeo’s resurgence. Marchionne, 64, has been planning to revive the brand globally since he took the reins at Fiat in 2004. Re-introducing it to North America became a priority after Fiat completed its acquisition of Michigan-based Chrysler in 2014. Finally conceding to growing demand for SUVs lets Alfa Romeo, which is traditionally focused on sedans and sports cars, tap US demand for large cars as other segments shrink.
Fiat shares rose as much as 3.4% in Milan trading and were up 2% to €7.02 at 1.10 pm, giving the company a market value of about €9.07 billion ($9.73 billion). Bloomberg