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2006 company profile edition 1
Alfa Romeo
2009 company profile edition 2
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Alfa Romeo
2009 company profile edition 2
June 2009
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Page iv Table of contents
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Table of contents
Single-user licence edition ..................................................................................................................... ii
Copyright statement .......................................................................................................................... ii
just-auto.com membership ................................................................................................................ iii
Table of contents .................................................................................................................................... iv
List of tables ............................................................................................................................................. v
Chapter 1 Company dossier .................................................................................................................. 1
Company name ................................................................................................................................. 1
Business activity ................................................................................................................................ 1
Stock symbol ..................................................................................................................................... 1
Key executives .................................................................................................................................. 1
Summary financials ........................................................................................................................... 2
Key competitors ................................................................................................................................. 2
Key customers ................................................................................................................................... 2
Outlook............................................................................................................................................... 2
Chapter 2 Worldwide locations.............................................................................................................. 4
Chapter 3 Financial analysis .................................................................................................................. 6
Chapter 4 Competitor analysis .............................................................................................................. 8
Chapter 5 Key events ............................................................................................................................ 11
Chapter 6 SWOT analysis ..................................................................................................................... 14
Strengths ......................................................................................................................................... 14
Weaknesses .................................................................................................................................... 14
Opportunities ................................................................................................................................... 14
Threats ............................................................................................................................................. 15
Chapter 7 Customers ............................................................................................................................ 16
Chapter 8 Products................................................................................................................................ 17
Chapter 9 Product development .......................................................................................................... 18
Chapter 10 Prospects............................................................................................................................ 24
Page v List of tables
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List of tables
Table 1: Global market presence of Alfa Romeo ................................................................................ 4
Table 2: Major plants of Fiat Auto worldwide, 2008 ............................................................................ 5
Table 3: Key consolidated financial performance of Fiat Group between 2004-2008 ....................... 6
Table 4: Key competitors of Alfa Romeo ............................................................................................. 8
Table 5: Summary of key events........................................................................................................ 11
Table 6: Breakdown of Fiat Auto‟s car and light commercial vehicle sales across regions, 2007-2008
(in thousands of units) ................................................................................................. 16
Page 1 Chapter 1 Company dossier
© 2009 All content copyright Aroq Ltd. All rights reserved.
Chapter 1 Company dossier
Company name
Alfa Romeo Automobiles SpA
Business activity
Alfa Romeo Automobiles SpA (Alfa Romeo), headquartered in Turin, Italy, is a
business unit of Fiat Auto SpA, which is, in turn, a subsidiary of Italy-based Fiat
Group. Alfa Romeo cars are renowned for their unorthodox design and
integrated aerodynamic styling. Alfa Romeo is also the styling leader within the
Fiat Group with features being introduced on Alfa Romeo vehicles being
incorporated in Ferrari, Maserati, Fiat and Lancia models sequentially. Alfa
Romeo branded cars are designed and developed with advanced technological
content, and have sporty features that are claimed to offer high-quality
performance, control and comfort functions. Successful vehicle models under
the brand include Alfa 147, Alfa 159, Alfa 156, Alfa GT, Alfa 166, Alfa Spider
and Alfa Brera. In fiscal 2008 (year ended 31 December 2008), the Fiat Group
generated net revenues of EUR59,380m (US$83,710m)*, an increase of about
1.5% when compared to the previous year‟s net revenues of EUR58,529m.
Notes: * Conversion rate employed is 1 EUR = 1.40953 US$ (Source: Fiat)
Stock symbol
Fiat Group‟s shares are listed and traded on the Berlin, Düsseldorf, Hanover,
Milan, Munich, Paris, Frankfurt and Stuttgart stock exchanges under the
symbol „FIA‟. The group‟s American Depositary Shares are also traded on the
New York Stock Exchange (NYSE) under the symbol „FIA‟.
Key executives
Luca Cordero di Montezemolo, chairman
John Elkann, vice chairman
Sergio Marchionne, chief executive officer, Fiat Group
Sergio Cravero, chief executive officer, Alfa Romeo Automobiles
Franzo Grande Stevens, secretary of the board
Note: All the above executives are the office bearers of the Fiat Group.
Page 2 Chapter 1 Company dossier
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Summary financials
In millions of EUR 2006 2007 2008
Net revenue 51,832 58,529 59,380
Operating income (loss)
2,061 3,152 2,972
Net income/(loss) 1,151 2,054 1,721
Capital expenditure 4,312 4,368 5,263
Fiscal year ended 31 December Source: Fiat
Note: All figures mentioned above pertain to Fiat Auto
Key competitors
Alfa Romeo‟s major competitors include Germany-based Daimler AG, Porsche,
Volkswagen and BMW; the US-based General Motors and Ford and Japan-
based Toyota.
Key customers
Fiat Auto‟s products are sold under the brand names, Fiat, Alfa Romeo and
Lancia. Its key markets include France, Germany, the UK, Italy, Spain, Poland
and Brazil.
Outlook
Alfa Romeo vehicles were reintroduced in the US after a decade long embargo
by the Fiat Group in 2008 with the launch of 8C Competizione, Alfa Romeo‟s
limited edition supercar. The car is presently being marketed through Maserati
dealers in the US. Due to the emergence of the global economic crisis, Alfa
Romeo is revisiting its plans of introducing other vehicles in the region. The
company had earlier planned to launch the face-lifted 159, Brera and Spider in
the US market in 2009. Further introductions are now expected to happen by
2011. However, Fiat‟s recent alliance with Chrysler could possibly be used to
introduce selected Alfa Romeo models with captive manufacturing at Chrysler‟s
idled facilities.
In Europe, Alfa Romeo‟s launch of the new three door super-mini, Alfa Romeo
Mi To in June 2008 was well received and is expected to generate significant
volumes in 2009. The launch of the Mi To was followed by discussions
between Fiat and BMW for exploring potential co-operation in components and
platforms for Alfa Romeo and Mini vehicles.
Page 3 Chapter 1 Company dossier
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In fiscal 2009, Fiat Group is targeting to achieve a trading profit of more than
EUR1bn, while net profit for the group is projected to be in excess of
EUR300m. In order to attain its targets, the Fiat Group will continue to lay
stress on group-wide purchasing synergies, targeted alliances and
strengthening strategic partnerships with suppliers through long term contracts.
Page 4 Chapter 2 Worldwide locations
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Chapter 2 Worldwide locations
Fiat Group Automobiles SpA (including Fiat Automobiles SpA, Alfa Romeo
Automobiles SpA, Lancia Automobiles SpA and Fiat Light Commercial
Vehicles SpA) is a subsidiary of Italy-based Fiat Group. The Fiat Group
employed about 198,348 people, as of December 2008. Alfa Romeo‟s cars are
manufactured mainly at the Pomigliano d‟Arco plant in Italy.
Table 1: Global market presence of Alfa Romeo
Region Location
Europe Albania, Austria, Belgium, Bielorussia, Bosnia Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Gibraltar, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Macedonia, Malta, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, the UK and Yugoslavia
Asia China, Hong Kong, Indonesia, Israel, Japan, Jordan, Korea, Kuwait, Lebanon, Malaysia, Oman, Philippines, Qatar, Singapore, Sri Lanka, Syria, Taiwan, Thailand and United Arab Emirates
Africa Egypt, Kenya, Madagascar, Mauritius, Morocco, Réunion, South Africa and Tunisia
North America
United States of America
Oceania Australia, Brunei Darussalam, New Caledonia, New Zealand and Tahiti
South America
Argentina, Brazil, Chile, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guadeloupe, Guatemala, Honduras, Martinica, Panama, Paraguay, Peru, Trinidad, Uruguay and Venezuela
Source: Alfa Romeo
Page 5 Chapter 2 Worldwide locations
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Table 2: Major plants of Fiat Auto worldwide, 2008
Region Facilities Products/Models
Italy 5 Fiat Qubo, Fiat Nuova Croma, Fiat 500, Fiat Bravo, Fiat Grande Punto, Fiat Ulysse, Fiat Panda, Fiat Sedici, Fiat Idea, Fiat Multipla, Fiat Nuovo Doblò, Fiat 600 Alfa Romeo Mito, Alfa Romeo 147, Alfa Romeo Brera, Alfa Romeo 159, Alfa Romeo 159 Sportwagon, Alfa Romeo GT, Alfa Romeo Spider, Alfa Romeo 8C, Alfa Romeo 8C Spider Lancia Ypsilon, Lancia Delta, Lancia Musa, Lancia Phedra
Brazil 1 Fiat Linea, Fiat Novo Siena, Fiat Novo Palio, Fiat Novo Weekend, Fiat Novo Adventure, Fiat Novo Stilo, Fiat Novo Punto, Fiat Novo Mile Economy, Fiat Nova Strada
Poland 1 Fiat Linea, Fiat Panda, Fiat Doblò, Fiat Qubo, Fiat 500, Fiat Nova Croma, Fiat Bravo, Fiat Sedici, Fiat Grande Punto
India 1 Fiat Palio Stile, Fiat Linea, Fiat 500
Source: Fiat
Page 6 Chapter 3 Financial analysis
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Chapter 3 Financial analysis
For fiscal 2008 (year ended 31 December 2008), Fiat posted net revenues of
EUR59,380m, registering an increase of 1.5% over EUR58,529m revenues
generated in the previous fiscal year. The trading profit of Fiat totalled
EUR3,362m, which was 4% higher than the previous year‟s profit with
improvement in all major segments. This increase was an outcome of the
performance of Fiat Auto and Iveco. In 2008, the group generated operating
income of EUR2,972m as against EUR3,152m in the previous year. The
Automobile segment‟s revenue increased by 1.3% to EUR29,380m which was
attributed to higher sales volume generated by Fiat Auto. Fiat group Automobiles
reported trading profit of EUR691m (2.6% of the revenue), registering a decline
of 13.9% when compared to EUR803m (3% of revenues) recorded in fiscal 2007.
Higher trading profit was attributed to record sales registered in the first three
quarters of fiscal 2008. In the subsequent quarter sales of the Automobiles
division were comparatively lower however the decline in trading profit was
compensated by robust sales in the Agriculture and Construction equipment
division.
During the first quarter of fiscal 2009, Fiat Group‟s revenues dropped from
EUR15,078m in 2008 to EUR11,268m due to weakening of demand especially
for construction equipment and trucks. The Automobiles division recorded a
17.7% drop in sales during the period with revenues totalling EUR6,111m in
2009. The group recorded a trading loss of EUR48m compared to a trading profit
of EUR766m in fiscal 2008. The Automobiles segment recorded a trading profit
of EUR27m. For the quarter the group registered a net loss of EUR410m in 2009
compared to a net profit of EUR405m in 2010.
Table 3: Key consolidated financial performance of Fiat Group between 2004-2008
(Figures are in millions of EUR)
2004 2005 2006 2007 2008
Net revenues 45,637 46,544 51,832 58,529 59,380
Operating income/(loss) (585) 2,215 2,061 3,152 2,972
Net income/(loss) (1,579) 1,420 1,151 2,054 1,721
Page 7 Chapter 3 Financial analysis
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Capital expenditures 3,322 3,520 ,4,312 4,368 5,263
Stockholders' equity (before minority interest)
4,928 9,413 10,036 11,279 11,101
Total assets 62,522 62,454 58,303 60,136 61,772
Fiscal year ended 31 December Source: Fiat
Note: All figures mentioned above pertain to the results of Fiat Group. While the figures for fiscal
2004, 2005, 2006 and 2007 are in accordance with the IFRS accounting standards, the financial results for fiscal 2002 and 2003 have been reported as per the Italian GAAP.
Page 8 Chapter 4 Competitor analysis
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Chapter 4 Competitor analysis
Alfa Romeo essentially competes in the sub-super car, supercar, mini and sub-
compact segments. Alfa Romeo had a market share of 0.9% in Western Europe,
as of 2008. The company‟s top-selling model, Alfa Romeo 147, a small
family/compact car, competes with Audi A3, BMW 1 Series, Citroën C4, Ford
Focus, Honda Civic, Hyundai Elantra, Hyundai i30, Mitsubishi Lancer,
Opel/Saturn Astra, Peugeot 307, Pontiac G5, Renault Mégane, SEAT León,
Škoda Octavia, Toyota Auris, Toyota Corolla, Volkswagen Golf, Volkswagen
Jetta, Volkswagen New Beetle and Volvo C30. Alfa Romeo‟s another successful
model, the 159, a compact executive/entry-level luxury car, competes with Audi
A4, BMW 3 Series, Cadillac BLS, Cadillac CTS, Lexus ES, Lexus IS, Mercedes-
Benz C-Class, Saab 9-3, Volvo S40, Volvo S60 and Volvo V50. In the early
months of 2007, Alfa Romeo began sale of the diesel version of the Alfa Spider.
The Alfa 147 Murphy&Nye version of the Alfa 147 was introduced, while the
sporty and aggressive looking Alfa 147 Ducati Corse was presented at the
Bologna Motor Show in December.
Alfa Romeo‟s major competitor, Daimler, headquartered at Stuttgart, Germany, is
one of the pioneers in automotive manufacturing. Its major brands in the
passenger car market include Mercedes-Benz, Maybach and smart. Another
major competitor of Alfa Romeo, Volkswagen AG, headquartered at Wolfsburg,
Germany, operates under four business lines, namely, Volkswagen brand group,
Audi brand group, Commercial vehicles and Remaining companies. The
Volkswagen brand group comprises Volkswagen passenger cars, Škoda, Bugatti
and Bentley brands, while the Audi brand group includes the Audi, Lamborghini
and SEAT brands.
Table 4: Key competitors of Alfa Romeo
Key competitors
Product/Technology focus of the competitor
Region/Market focus of the competitor
Major brands that compete with Alfa Romeo
Daimler AG Low-emission engines (BLUETEC technology);
Current major markets –
Mercedes-Benz C-Class Saloon,
Page 9 Chapter 4 Competitor analysis
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Drive System-technologies; fuel-cell drives; car-to-car communication technology; hybrid drives; active brake assist
Western Europe, NAFTA
C-Class Estate, C-Class Sports Coupé, CLK-Class Coupé, CLK-Class Cabriolet, CL-Class Coupé, CLS-Class Coupé, E-Class Saloon and E-Class Estate
Targeted markets – China and India
Volkswagen AG
Hybrid concept with electric drive and petrol engine; fuel cell technology; diesel powered racing cars; side assist and lane assist safety systems; adaptive cruise control; LED rear lights, Euro-5 compliance, lower carbon dioxide and NOx emissions
Current major markets – Germany, the US and the UK
Audi A3/S3, A4/S4 and A6/S6; Škoda Octavia and Superb; VW Golf, Rabbit, Bora, Jetta, Passat and Phaeton; SEAT León and Toledo
Targeted markets – Russia, China, India, Indonesia and Brazil
BMW Hydrogen – H2R (1 and 2) hydrogen combustion engine and the straight-six petrol engine – 3; straight six cylinders Otto Engine; Valvetronics; multi-stage turbo-charged diesel engine; brake force display, tyre defect indicator; dynamic stability control (DSC) and electronic damper control (EDC)
Current major markets – The US, Germany and the UK
BMW 1 Series – E81, E82, E87 and E88; 3 Series – E 90 and E93 Targeted
markets – Asia, Latin America and Eastern Europe
Source: Alpha Romeo, Other published sources and Company reports
Volkswagen is currently focusing on the development of energy-efficient
automobiles with advanced engine technologies that would reduce emissions. To
this end, the group has launched the innovative „Clean TDI‟ system, which would
help in achieving lower emissions levels. The product, if successfully launched,
would particularly keep carbon dioxide emissions low, apart from reducing the
NOx emissions by 90%. Some of the important product development initiatives
made by Volkswagen in 2006 include the new Volkswagen Eos Convertible
Coupé, additional features in the Touran and Touareg models, Audi braking
guard and the new generation of adaptive cruise controls (ACCs).
Page 10 Chapter 4 Competitor analysis
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Thanks to the growing demand and the low-cost production advantage in the
Asian markets, including China and India, Volkswagen foresees a huge
opportunity for expansion in these regions. To cash in on this, the group is setting
up new facilities in these emerging auto markets. Following the establishment of
a new production facility at Changchun, China, with an annual production
capacity of 330,000 vehicles, Volkswagen announced in November 2006 that a
new plant would be established at Pune, India. In addition, the group announced
its plans to set up an independent sales company in India.
Page 11 Chapter 5 Key events
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Chapter 5 Key events
Table 5: Summary of key events
Year Event
February 2007
Launch of a new diesel version of Alfa Romeo‟s Spider convertible
2005 Launch of Alfa Romeo‟s new model, Brera
2004 Launch of Alfa Crosswagon and Q4
2003 Launch of new versions of Alfa 156, 166, GTV and Spider
2002 Launch of 156, Sportwagon and 147 models
1998 The car model 156 wins the “Car of the Year” award
1986 Take-over of Alfa Romeo by Fiat Group
1978 Implementation of a new restructuring programme
1964 Establishment of Autodelta for developing racing cars
1958 Agreement with Renault for manufacturing Dauphine saloon
1945 Production of naval engines, aviation engines and electric cookers
1932 Take-over of Alfa Romeo by Institute for Industrial Reconstruction (IRI)
1920 Production of Torpedo 20-30 HP, the first car under the Alfa Romeo logo
1910 Establishment of "Anonima Lombarda Fabbrica Automobili" in Milan, Italy
Source: Alfa Romeo
Anonima Lombarda Fabbrica Automobili (A.L.F.A.) was established in 1910 in
Milan, Italy. Under the leadership of Cavalier Ugo Stella, the company started
producing a series of vehicles, with 24 HP being the first car to be launched
under the Alfa brand name. It was soon followed by the 40 HP and the 60 HP car
models that featured more powerful engines. Alfa, which became a part of the
Nicola Romeo group of companies in the mid-1910s, was engaged in producing
military hardware during the First World War. Torpedo 20-30 HP was the first car
to be launched under the Alfa Romeo brand name in 1920.
Alfa Romeo was entangled in a major crisis with its majority shareholder, the
Banca Italiana di Sconto, and was facing a threat of closure during the late
1920s. However, the company survived the crisis and kept going, thanks to the
reputation it had built with its powerful, high-performance cars and the strong
brand image that it had carved for itself in both the domestic and overseas
markets. The company launched the lighter and faster six-cylinder cars in 1928,
and also initiated mass production of vehicles.
Page 12 Chapter 5 Key events
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The Institute for Industrial Reconstruction (IRI) took over Alfa Romeo in 1932.
The company‟s plants were modernised, and production of lorries and buses
started during the first half of the 1930s. The late 1930s witnessed an intensified
production of aircraft engines and the construction of a facility at Pomigliano
d'Arco.
Alfa Romeo‟s production operations were severely affected during the Second
World War due to a scarcity of supplies and the bombing of its factories. Putting
the ordeal of the war behind it, the company slowly started to diversify its product
base by manufacturing aviation and naval engines and electric cookers, in
addition to cars. The 158 and 6C 2500 were the first cars to be launched by the
company after the war. The late 1940s witnessed the launch of a variety of
special edition cars of the 2500 model.
Alfa Romeo focused mainly on producing cars during the early 1950s. The
company, which was capitalising on its sporting success, was working on
establishing an assembly-line production process. The company was promoting
the “Made in Italy” image and was also producing one-off models and limited
editions in association with famous stylists during the period. Successful
launches during the 1950s included that of Giulietta Sprint and the police
“panther” version of the 1900 model cars. The company entered into an
agreement with France-based Renault in 1958 for manufacturing the Dauphine
saloon vehicles.
In 1960, the company commenced construction of a new factory at Arese. This
facility started its operations in 1963, producing the Giulia cars. While the early
1960s witnessed the launch of two versions of the Giulietta range, the SS and
the SZ models, the late 1960s saw the construction of the Alfasud factory at
Pomigliano d'Arco. Autodelta, established in 1964 for developing racing cars,
collaborated with McLaren in 1970 for supplying 8V 3000 engines for Formula 1.
Successful sporting cars launched during the 1960s were the Giulia GTA (Gran
Turismo Alleggerita) and the Duetto.
Operating under severe energy crisis in the 1970s had led to several
management problems at Alfa Romeo. The company‟s financial situation was
Page 13 Chapter 5 Key events
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badly hurt, as it could not meet market demands. A new restructuring programme
was implemented in 1978 to bring the company back on track.
As its joint-venture car manufacturing operations with Japan-based Nissan did
not produce the expected results, Alfa Romeo‟s business continued to struggle
during the early 1980s. Fiat, which took over Alfa Romeo in 1986, grouped it with
Lancia to form Alfa Lancia SpA, which began operations in 1987. Many new Alfa
Romeo models with several technological advancements were developed and
launched during the 1980s, which further strengthened the company‟s brand
image.
The 1990s witnessed the rebirth of the company with many new car models
being introduced, including the 155, 145 and 146 produced at its Pomigliano
d'Arco plant; and the Spider and GTV produced at its Arese plant. The 156 and
147 models won the “Car of the Year 1998” and the “Car of the Year 2001” titles,
respectively. In the early 2000s, the company launched GTAs 156, Sportwagon
and 147 in 2002; newer versions of Alfa 156, 166, GTV and Spider in 2003; and
Alfa GT and Alfa Crosswagon in 2004.
In April 2005, Fiat transferred the ownership of Maserati from Ferrari to Fiat, to
enable better cooperation between Maserati and Alfa Romeo on both technical
and commercial operations. In the latter half of 2005, Fiat announced its plans to
invest around EUR200m in Alfa Romeo‟s new model, Brera, which was launched
in the market in November 2005. In the same month, Alfa Romeo 159 was
honoured with the L'Automobile pi Bella del Mondo award, in the most beautiful
sports sedan category.
Fiat Auto's name was changed to Fiat Group Automobiles SpA in February 2007.
It was also announced that four new companies would be formed, as 100%
owned companies of Fiat Group Automobiles SpA, under the names, “Fiat
Automobiles SpA”, “Alfa Romeo Automobiles SpA”, “Lancia Automobiles SpA”
and “Fiat Light Commercial Vehicles SpA”. Also in the same month, a new diesel
version of Alfa Romeo‟s Spider convertible was launched in the UK, Germany
and Italy.
Page 14 Chapter 6 SWOT analysis
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Chapter 6 SWOT analysis
Strengths
Alfa Romeo is a part of Fiat Group, which is one of the major manufacturers of
automobiles worldwide. Alfa Romeo, is one of the leaders in the Italian
automobiles market and is known for its unique unorthodox styling. Over the
years, Alfa Romeo‟s cars have earned a reputation for stylish designs and high
product quality, offering top-class performance and control features in addition to
enhanced safety and comfort.
Alfa Romeo, which has enjoyed success in the racing arena, has been able to
successfully transfer its racing technologies to its passenger cars. The company
also derives product synergies and economies of scale by sharing technological
and commercial capabilities with other brands of Fiat Group, specially Maserati
after Fiat acquired full control of the brand.
Weaknesses
Though Fiat has a global sales footprint, a major part of its revenue is generated
mainly from Western Europe. Alfa Romeo being a niche brand has a limited
presence beyond Europe. After the company‟s withdrawal from the US in1995,
Alfa Romeo‟s has primarily been marketed only in Europe and has a weak
presence in other markets.
Opportunities
Fiat‟s strategy of entering into industrial co-operation with major partners has
paid rich dividends in recent years. Citing the success of these associations, Fiat
has already formed an alliance with Chrysler. Specifically in Alfa Romeo‟s case,
the company is evaluating the possibility of component and platform co-operation
with BMW‟s Mini. Fiat has indicated that it would use Alfa Romeo‟s platform and
powertrain while preparing small and sub-compact vehicles for Chrysler. This
could also lead to the production of select Alfa Romeo models at Chrysler‟s idled
facilities. Fiat Group has also been strengthening its presence in low-cost
countries, such as India and Turkey, through joint ventures and partnerships.
Moreover, Fiat is focusing on expansion in the Latin American region by investing
Page 15 Chapter 6 SWOT analysis
© 2009 All content copyright Aroq Ltd. All rights reserved.
heavily on the development of new vehicles and automotive technologies in
Brazil.
Alfa Romeo will benefit from the well-established and expanding distribution
channels and sales network of the Fiat Group. The transfer of Maserati‟s
ownership from Ferrari to Fiat Partecipazioni has also resulted in better
cooperation between Maserati and Alfa Romeo brands in both technological and
commercial terms. This is also expected to reinforce Alfa Romeo‟s leadership in
the racing arena, in addition to expanding its operations in other key international
markets.
Threats
Fiat had faced significant labour problems in 2007 and brief work stoppages in
2008. Earlier, due to the labour unrest in 2005, Fiat had to temporarily halt
operations at three of its plants, which faced storage capacity problems. In the
same year, Fiat Auto suffered car shipment blockages due to disagreements
between the companies that transport its vehicles and the owner/operator
subcontractors of the transporting companies. Such issues cause serious
damages to the company, in terms of employee morale, sales loss and disruption
of distribution networks. Any such occurrences in the future can affect the sales
and economic well-being of Alfa Romeo also. Foreign investment regulations,
trade restrictions and currency exchange rate fluctuations, in addition to soaring
raw material, energy and fuel costs, continue to pose a threat to Alfa Romeo‟s
operations and business.
Page 16 Chapter 7 Customers
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Chapter 7 Customers
In fiscal 2008, Fiat Group Automobiles delivered a total of 2,152,500 automobiles
and light commercial vehicles, down 3.6% (approximately 233,800 units) from
2007. In Western Europe deliveries were1,237,500 units. Volumes dropped
sharply in all major European countries: 16% in Italy, 38.7% in Spain, , 8.1% in
Great Britain. But strong growth of 30.7% was achieved in France. In addition,
growth of 14.4% was witnessed in Germany. Fiat Group Automobiles‟ share of
the automobile market improved to reach 31.9% in Italy (increase by 0.6
percentage points) and 8.2% in Western Europe (increase by 0.2 percentage
points). In Brazil, where automobile market demand continued to be particularly
buoyant, Fiat Group Automobiles achieved a 10.6% increase in deliveries and a
24.9% share of the automobile market (decrease by 1.0 percentage points), thus
confirming its leadership position. In Poland, deliveries increased by 6.5%, with a
market share of 10.1% (decrease by 0.2 percentage points).
Table 6: Breakdown of Fiat Auto‟s car and light commercial vehicle sales across regions, 2007-2008 (in thousands of units)
Regions 2007 2008
Italy 854.6 718.1
Germany 107.3 122.8
France 94.7 123.8
Spain 79.4 48.7
The UK 77.7 71.4
Rest of Western Europe 143.3 153.1
Brazil 613.1 665.6
Poland 39.1 41.6
Rest of the world 224.6 207.4
Sales by associated companies 90.6 76.5
Total unit sales 2,324.4 2,229
Source: Fiat
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Chapter 8 Products
Alfa Romeo‟s current line-up of vehicle models includes the Alfa Romeo MiTo in
the sub-compact sports car category; Alfa Romeo Spider, Alfa Romeo 8Cand
Alfa Romeo 8C Spider in the sportscar category; Alfa Romeo GT Sports Coupé,
Alfa Crosswagon, Alfa 159 and Alfa 159 Sportwagon in the intermediate
category; Alfa 147 in the intermediate/compact category; and Alfa Brera and Alfa
166 in the full-sized category.
The Alfa Romeo MiTo, (abbervation for Milan and Turin) was first introduced in
Milan in 2008 and internationally launched in June 2008 at the British Motor
Show. The three door hatchback is the first sub-compact sports car and
competes with the BMW Mini and the upcoming Audi A1. The Mi To is built on
the Fiat/GM SCSS platform which is also used on the Fiat Grande Punto and
Opel/Vauxhall Corsa D. The car sports the new Alfa DNA system which permits
the driver to select from three driving settings. By choosing between the
Dynamic, Normal and All-Weather settings, the driver can control the
performance of the engine, brakes, suspension, steering and transmission. The
MiTO was well received with 23,000 initial orders.
Alfa Spider, which was premiered at the Geneva Motor Show, won the “Cabrio of
the Year 2006” award in March 2006, from the Comité Cabriolet (a jury of 23
specialised journalists from 12 different nations). The Spider, a two-seater with a
spacious luggage compartment, has a highly sophisticated and comfortable
interior that features high-class technological contents, including automatic twin-
zone climate control systems, steering-wheel mounted controls, vehicle dynamic
control (VDC) and cruise controls.
The limited edition, two-seater super sports car, Alfa Romeo 8C Competizione,
was premiered at the Paris Motor Show in September 2006. The car, designed at
Alfa Romeo Style Centre in Arese and developed in association with Maserati,
features a steel chassis that supports a carbon fibre body. This rear-wheel drive
sports car has a six-speed robotic gearbox and runs on a 4.7-litre, eight-cylinder
90°V engine, which delivers 450 horsepower.
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Chapter 9 Product development
Fiat Group‟s overall research and development activities involve some 14,500
people at 118 centers. The Fiat Group organizes its advanced research and
innovation work through two companies, the CRF - Centro Ricerche Fiat (Fiat
Research Centre) and Elasis, whose strategies are coordinated by the Technical
Committee of the Group Executive Council. CRF is headquartered at Orbassano
on the outskirts of Turin and has key centres located at Bari, Trento and Foggia.
CRF also has controlling interest in CRP, Fiat‟s plastics and optics research
centre in Udine, which focuses on advanced research in optics and plastics for
automotive lighting systems. CRF core group has 850 employees with broad
technical skills and some of the most advanced laboratories. For powertrain
systems testing, electromagnetic compatibility investigations, NVH analyses,
driving simulations, materials and process development, optoelectronics and
micro technologies. Further CRF also partners with 150 universities and 1,000
industrial partners globally.
Elasis is a highly specialized research center focused on technology innovation,
complete vehicle development, mobility and its environmental impact, and traffic
safety. In 2008, Elasis acquired Comau‟s Engineering division in Turin. Elasis
has research and development facilities at Pomigliano d‟Arco, Elasis Product &
Process Development in Turin, and the Elasis Centre in Lecce. Elasis employs
some 1,200 associates and is equipped with sophisticated computer aided
design and measurement tools and advanced physical and virtual testing
equipment. Like CRF, at Elasis work on engines and transmissions is carried out
as part of Fiat Powertrain Technologies‟ development projects. Elasis also works
with consortia of universities and private institutions in basic research and
training on the issues related to mobility and its environmental impact.
Despite the challenging market conditions in 2008, Fiat Group spent
approximately EUR2bn or 3.4% of net revenues of industrial activities on
research and development activities. In 2008, more than 2 million cars, 2 million
transmissions, 2.5 million engines and a number of commercial vehicles, tractors
and units of construction equipment were produced in the group‟s factories. CRF
company filed 51 new patents in 2008, raising its total number of patents
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registered to over 2,300 and has over 600 patents pending for approval with
authorities.
Fiscal 2008 saw the launch of several key offerings to the product range,
particularly for Lancia and Alfa Romeo. Also a number of Fiat group Automobiles‟
models received major international awards.
CRF made the following innovations in 2008:
Multijet II: Development work on the successor to the MultiJet I, which is
amongst the best performing diesel engines in the contemporary market was
completed in 2008. The new engine 1.3L small diesel engine (SDE) is Euro 5
compliant and uses solenoid injectors. Multijet II will enter production in 2009
on the 95 hp Euro 5 1.3-litre SDE Lancia Musa, and will later be installed on
all Euro 5-compliant applications with 75 and 95 horsepower 1.3-litre SDE
engines. CRF is also studying the potential of the Multijet framework for
commercial vehicle applications.
Multiair: Developed on 1.4-litre 16-valve FIRE gasoline engine and the new
900 cc two-cylinder SI engine in the Small Gasoline Engine (SGE) family,
Multiair will enter commercial production in 2009. The Multiair technology has
also been tested on Diesel engines leading to flexible and precise air
metering and internal EGR exhaust gas recirculation. Further benefits include
higher low-end torque, smoother cold weather operation, more even torque
delivery, and no engine shake at shut-off. The additional cost of installing the
system on a diesel engine is largely offset by the fact that all external HP-
EGR high-pressure exhaust gas recirculation components and the throttle
valve can be eliminated, while lower noble metal content is required in the
catalytic converter.
Hybrid city car propulsion: In 2008, CRF commenced development work on a
hybrid propulsion system for city cars. The proposed hybrid drive setup
consists of the 900 cc two-cylinder SI engine from the SGE family, combined
with a DDCT Dual Dry Clutch Transmission featuring an electric motor
coupled to one of its two mainshafts. The SGE engine‟s small size makes it
possible to use a simple, efficient transmission architecture, while coupling
the motor downstream of the clutches means that all the characteristic
functions of a parallel hybrid propulsion system, including electric drive,
regenerative braking and torque boost from the two motors, can be provided
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in a compact, lightweight package: essential for small urban runabouts. The
hybrid propulsion system uses air-cooled lithium ion batteries housed in the
car‟s trunk. Other features include plug-in traction battery recharging and an
HVAC system that can be powered by either the IC engine or the electric
motor, using whichever unit provides peak efficiency at any given time.
Driving advisor: is essentially a lane departure warning system with haptic
interface and was launched on the new Lancia Delta in 2008. The system
becomes active above 55kph and signals the driver when the car is about to
drift out of its lane by applying variable resistance on the steering. The
system uses a T camera and image processing software that relays
information about the road, scanning ahead up to 30 metres. The video
device tracks the lines marking the edges of the lane and indicates the
vehicle‟s position in terms of both orientation and movement away from the
center of the lane. The processing unit then selects an actuation command
that will be sent to the steering system. Electric power steering, guided by the
actuation motor and the torque/steering wheel angle sensors required for
correct operation, carries out the control order.
Telematic platforms: CRF is also involved in developing next generation
telematic platforms both individually and through joint development programs
of automakers in the European Union. CRF and Fiat Automobiles are part of
the Car-2-Car Communication Consortium, whose objectives is to establish a
European industry standard for car-to-car communication systems based on
wireless LAN components and to promote the establishment of a royalty-free
frequency band for road safety applications. This frequency band was
assigned in August 2008. At the 2008 Car-2-Car Forum, Fiat Group
Automobiles and CRF. presented their first road safety applications for
signalling hazardous situations such as a stationary vehicle in the road. CRF
is also working to establish the requirements and preliminary design for an
inter-Sectoral platform which, would make it possible to offer advanced
services and functions in the future. The platform would provide enhanced
performance and extended processing and memory capacity and be fully
integrated with latest-generation telecommunications standards (3G, satellite,
etc.), with evolving wireless standards (Bluetooth 2.0, Wi-Fi), and with
consumer electronics interfaces (smartphones, memory cards, etc.). In
addition, the platform would make it possible to view graphical interfaces on
different types of display, thus ensuring maximum design flexibility. The
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platform‟s modular approach would also reduce costs through end-product
scalability.
Low environmental impact air conditioning systems: regulates the
compressor activation threshold while the control algorithm cuts the amount
of fuel consumed by air conditioning around 30%. CRF developed and
installed the Energy Saving control for air conditioning system compressors
on Fiat Group subcompacts vehicles in 2008 and is studying its applications
on other Group vehicles. CRF also conducted research work on new
refrigerants with low global warming potential that comply with the European
Union‟s new F-Gas Regulation, which calls for phasing out fluorinated gases
such as today‟s R-134a refrigerant.
PERFECTS software: Developed in the first half of 2008 by CRF,
PERFECTS is a new proprietary fuel consumption simulation tool based on
existing software and earlier experience by CRF, FPT Powertrain
Technologies, Fiat Group Automobiles and Iveco.
Environmentally friendly and recycled plastics. During 2008, CRF continued
its study pertain to the use of environmentally friendly plastics for vehicle
interior components. These plastics are reinforced with vegetable fibres
rather than mineral fibres, providing environmental benefits over the entire
product life cycle: the fibres come from plants that absorb CO2 as they grow,
while the methods used to process and mold vegetable fibre are more
environmentally and energy efficient. These benefits continue in the end-of-
life vehicle dismantling – an increasingly critical stage – where plastics with
vegetable fibers offer higher potential for energy recovery.
Ecofactory: initiative of the CRF was conceived to improve energy efficiency
in production. In 2008, there was a focus on improving energy efficiency at
the Iveco plant in Suzzara and Fiat Group Automobiles‟ Mirafiori plant, with
energy audits and other metrics. This program will be extended and
improved in the coming years, when the Ecofactory model‟s energy-savings
criteria and low environmental impact technologies will be applied to system,
process and facility design, construction and refurbishment.
The new Alfa Romeo MiTo launched in June 2008 sports the Alfa DNA system
which permits the driver to select from three driving settings. By choosing
between the Dynamic, Normal and All-Weather settings, the driver can control
the performance of the engine, brakes, suspension, steering and transmission.
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In 2007, the company‟s vehicle research work concentrated on the Alfa 8C -
Competizione project and development of the new Fiat Fiorino. In developing the
Alfa 8C, Elasis (a Fiat Group‟s research agency that promotes innovative
development and its application in projects, products and processes) followed up
on the experience it gained in building the prototype for this car in 2004.
Alfa Romeo‟s new sports saloon, the 159, successfully cleared the stringent
EuroNCAP safety tests in January 2006. The car won five-star ratings for its
occupant protection systems and four-star ratings for child safety systems. It was
also named as one of the safest cars in the world. The car‟s safety equipment
features several advanced passive safety devices, including window bags, side
and knee bags, dual-stage front airbags, safety belts with load limiters and
pretensioners, active head restraints and Isofix fittings for child seats. While the
car‟s body was constructed using high-strength dual-phase steels, its doors were
equipped with ultra-high strength steel reinforcements.
In June 2006, Alfa Romeo presented the 2.4 JTD 200 bhp and 1.9 JTD 150 bhp
variants of the Alfa 159 car range, equipped with Q-Tronic automatic gearbox
systems. The Q-Tronic is an autonomous control unit, engineered to improve the
control of the car, driving comfort, active safety and sporting behaviour, while
simultaneously reducing fuel consumption. The Q-Tronic offers four driving
modes, namely, Default, Sport, Winter and Sequential. The Sport mode offers
fixed gear shifting ratios at high engine speeds, thereby imparting a sporty feel to
the drive. While the Winter mode enables starting and running in low grip
conditions, the Sequential mode facilitates manual gear shifting. Various other
features available with the Q-Tronic are the Up & Down slope function that
adapts appropriate gear ratios according to the slope of the road and the Braking
Assist function that decelerates the vehicle when shifting down gears.
Also, in 2006, Alfa Romeo had designed and developed the Q2 self-locking
differential system that ensures maximum traction and control under all driving
conditions. The Q2, available on the Alfa 147 and the Alfa GT, is a Torsen
mechanical-type limited-slip differential that divides the torque between the
driving wheels according to grip conditions. It enhances road-holding by
improving traction, reducing the understeering effect upon acceleration and
maximising stability on deceleration. This innovative system helps improve active
safety, control and driving pleasure.
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Early 2007 witnessed the launch of a new diesel version of Alfa Romeo‟s Spider
convertible, which was powered by a 200 bhp, 20-valve, 2.4-litre diesel engine,
featured a six-speed manual gearbox and was claimed to reach a top speed of
more than 228 km/h. The Multijet diesel engine featuring a particulate filter in the
exhaust system was designed to comply with the current Euro 4 and the
proposed Euro 5 emissions legislations.
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Chapter 10 Prospects
In fiscal 2009, the Fiat Group targets to achieve trading profit of more than
EUR1bn while net profit for the group is projected to be in excess of EUR300m.
In order to attain its targets, the Fiat Group will continue to lay stress on group-
wide purchasing synergies, targeted alliances and strengthening strategic
partnerships with suppliers through long term contracts.
During 2008, the group worked intensively on renewing its product range,
improving industrial processes, strengthening brand image and accelerating
international expansion including targeted alliances. The group also signed a
letter of intent with Chrysler and Cerberus Capital Management for the creation
of a global strategic alliance. According to the alliance, Fiat received an equity
interest in Chrysler and gained access to new markets while Chrysler gained
access to competitive platforms for fuel-efficient vehicles, engines, transmissions
and components where Fiat is already well-established. Specifically in Alfa
Romeo‟s case, the company is evaluating the possibility of component and
platform co-operation with BMW‟s Mini. Fiat has indicated that it would use Alfa
Romeo‟s platform and powertrain while preparing small and sub-compact
vehicles for Chrysler. This could also lead to the production of select Alfa Romeo
models at Chrysler‟s idled facilities. Alfa Romeo vehicles were reintroduced in the
US after a decade long embargo by the Fiat Group in 2008 with the launch of 8C
Competizione, Alfa Romeo‟s limited edition supercar. The car is presently being
marketed through Maserati dealers in the US. Due to the emergence of the
global economic crisis, Alfa Romeo is revisiting its plans of introducing other
vehicles in the region. The company had earlier planned to launch the face-lifted
159, Brera and Spider in the US market in 2009. Further introductions are now
expected to happen by 2011.
Fiat Group Automobiles (Fiat), as a part of the 2007-2010 growth and margin
expansion plan, seeks to transform the group into a significant international
industrial enterprise. To achieve this, the group is considering various business
opportunities, which include focusing on strategic alliances in emerging markets
such as Russia, India and China and introducing new products. In the context of
the global economic crisis, Fiat is keen to selectively enter alliances which would
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help the company in achieving its growth objectives without committing extensive
capital.