"Fiat CEO sees Alfa Romeo brand as key mgt issue after underestimating VW threat
10.26.2005, 01:14 PM
MILAN (AFX) - Fiat SpA CEO Sergio Marchionne said sorting out the Alfa Romeo auto brand is a key management issue for the company, adding that Fiat had underestimated the threat from Volkswagen AG.
Speaking in an analysts conference call, Fiat said in a slide presentation that Alfa's sales in the third quarter were 'disappointing' ahead of the launch of the new 159 and Brera models.
'Bayerische Motoren Werke has been seen as the most important single competitor' for Alfa Romeo models, said Marchionne.
'There is other competition from VW's Golf. We have not paid enough attention to what they (VW) have done. We need to respond to competitive pressures from VW in the market place,' he said.
Fiat has 'learned a lesson' from VW, including on selling the Alfa 147 model, which is to be repositioned to face VW's rival model and which is the 'benchmark' for this market segment, he said.
In particular, Fiat has added front wheel drive technology to some 147 versions, as well as providing a low end of the range version, he said.
The results of a three to four week exercise on understanding the Alfa's market positioning should lead to a company statement in the next five to six weeks on how it will distribute Alfa models, he said.
However, he said there is 'less of an issue' with the new 159 and Brera models, which are currently being launched and which face a 'cleaner' market.
On other issues at the Fiat Auto unit, Marchionne said Fiat has time in the next 18 months to overhaul its European distribution network outside Italy after a steady loss of market share.
In Germany, where Fiat's share has fallen under 2 pct, Fiat will this year see a profit on sales of new cars for the first time in many years, while in the UK, there will be profit in 2006, he said.
Outside Italy, the number of distributors has not fallen from a year ago, and with a more competitive product range Fiat can hold this position, he said"