Alfa Romeo Part of Audi-Fiat Discussions Says Report from Ward’s Auto

Were you to just consider the salacious headlines covering back and forth corporate jabs between Volkswagen Group executives and Fiat CEO Sergio Marchionne, the chances Alfa being sold to the Germans might very well be considered more the latter in a slim to none scenario. All that being said, a report this week filed by Ward’s Auto suggests this may very well be the case. Talks are said to be ongoing between the Volkswagen Group’s Audi AG unit and Fiat over a possible business transaction and the Wards piece theorizes that the main catalyst for such talks might directly be attributed to an Auto union. No irony there.
Well, let’s be clear. We’re not talking about Audi AG’s former official name nor its 1930s silver arrow racers campaigned under the name ‘Auto Union’ but rather the United Auto Worker’s Union (UAW) and their Voluntary Employee Benefit Association (VEBA) that owns auto a 4.15% stake in Chrysler following the government bailouts. In order to complete the purchase of Chrysler, Marchionne needs to purchase those shares and their value remains a point of contention between the Italian car manufacturer and the worker’s union. Further, the stronger Fiat makes Chrysler, Jeep, SRT and Ram, the more perceived value those shares have.
According to Ward’s, Marchionne signaled a willingness to sell off components manufacturer Magneti Marelli as a way to raise some cash. Audi is said to have been interested in this business and likely as a support system for Ingolstadt’s own growing Italian empire that now includes Lamborghini, Ducati and Giugiaro-ItalDesign. However, the Ward’s theory goes further than that suggesting the talks include Alfa Romeo and possibly Fiat’s Pomigliano production facility originally built in the 60s to build Alfas but one that builds Fiat Pandas today.
Not surprisingly, both Fiat and Audi deny any discussions at all but given Ward’s credible reputation and level of detail, we’re not ready to yet cast this story off as just another rumor story to feed the Piech v. Marchionne narrative. We’re summarizing the Ward’s report in this story but we highly suggest you read it in its entirety for a more intricate take on the current business situation (thanks Hans for the tip).
Does Alfa Romeo Make Sense as Part of Audi AG or the Volkswagen Group as a Whole?Just where Alfa might fit within the increasingly complex lexicon of the Volkswagen Group remains to be seen. Certainly the press has been more vocal as of late that the Volkswagen Group may be getting too big and thus too unmanageable. References to GM in the latter half of the 20th century are quick to come out in such cases, but to be fair to Volkswagen they’ve not really had any serious issues with the brands they manage. All except SEAT are in growth phases and with strong product lineups and even SEAT’s lineup is arguably stronger than it’s ever been though the Spanish home market is off some 40% and that’s hard to make up.
Rather than the rather unfair comparisons between grille-focused badge-engineering days at GM, Volkswagen may actually be the best yet at embracing Harley Earl’s vision. They build quality cars for literally every level of income and while there are similarities across marques they really have no equal in the art of differentiation between brands across common platforms. Further, a quick look at Audi’s A3 sedan just this last week in New York was all that was needed to truly open our eyes to the advantages of economies of scale in the vaunted MQB platform matrix and how that will allow Audi to take some of those savings and apply them to improving the material quality and allow that car to feel more like an A6 in touch, feel and haptics.
The Volkswagen Group and Audi have shown a keen ability to embrace storied brands and use their very impressive hardware portfolio as the basis of a product onslaught. Alfa is rich in heritage and a strong design brand – seemingly perfect for the Audi and its Volkswagen Group parent in that regard. Still, positioning within the brand could be tricky.
Imagine an Alfa Romeo rich in product based on the latest MQB, MLB and MSB matrices and it’s not hard to also envision an Alfa highly in competition with Audi itself – a design and technology focused premium brand with a rich racing heritage. Volkswagen has been fairly successful in carving niches for its own Volkswagen, Skoda and SEAT brands as they compete in the lower end of the market but Audi already finds itself in competition with Porsche and Bentley for some products and that’s at a time when both those exotic brands plan crossovers and smaller ‘sedan’-based models. Then again, what’s good for an Audi-owned Alfa may also be good for Audi itself. Perhaps that’s why this rumored deal comes from Audi specifically rather than Volkswagen.
A few months ago we proposed our own theory why Lancia may be the better deal. While completely unfounded, it was our own take on how a Fiat-sourced badge added to the group might be positioned. You can read that HERE.