Fiat Ponders Selling Alfa Romeo to VW
The companies have been negotiating the possible sales, according to industry sources, confirming a report in Automotive News.
Volkswagen supervisory board chairman Ferdinand Piech has recently taken the unusual course of publicly stating that VW would like to buy Alfa, and that it believes as a company that it could turn the Italian brand around to profitability more easily than Fiat. That move was probably meant to inform industry analysts, and thus pressure Fiat to sell.
VW, of course, has made a business the last decade or more of collecting brands. Today, the VW Group includes not only VW, but Audi, Bentley, Lamborghini, Bugatti, Skoda, Seat and most recently, Porsche.
In April, Marchionne announced a plan to boost Alfa sales to 500,000 units by 2014. But analysts are skeptical. Marchionne also has said he plans to sell the full Alfa line in the U.S. by 2012. The cost of making all the Alfas compliant with U.S. crash and emission standards is costly, and would likely delay that plan anyway. Currently, about 100 Alfas a year get sold in the U.S. through Maserati dealerships.
The selling price for Alfa would be btween 1.5 billion to 2 billion Euros, and the deal would leave Fiat Auto all but debt free, an enviable position. It would also take the annual $200 million to $300 million loss off Fiat's operating results.
The reason to keep Alfa Romeo is for future profits that could, it is argued, be produced by sharing engineering platforms emong Alfa, Chrysler and even Jeep. There is an idea that Afar Romeo cars, which are higher priced and pack bigger per-vehicle profits than Fiat vehicles, will contribute to Fiat's profit growth in the next five or six years and beyond as the company achieves greater integration among the two companies.
Take a look at the vehicles that comprise Alfa Romeo today, and could soon be part of the giant German automaker VW. It's not hard to see how Volkswagen would eventually combine its platforms with Alfa, developing the next generation VW Golf for example with the next generation Alfa Giulietta.
Gallery: Alfa Romeo On The Block