Selling low volumes of vehicles may be a counterintuitive approach for brands that have struggled to make their mark in North America, but that's the plan to elevate Stellantis NV's Italian brands here, according to their executives.
They want to position Alfa Romeo, Fiat and Maserati as the company's upscale offerings compared to its mass-market U.S. brands like Chrysler, Dodge, Jeep and Ram. Stellantis officials say pushing vehicles with incentives to generate volume has cost the Italian brands their cachet and quality in the past. Now as the brands introduce new electrified vehicles, the vision is for pricing discipline to make up for lower volumes. The messaging, however, comes amid recession worries and high rates of inflation.
"The hoopla and excitement about some of these brands coming back never materialized into sales," said Ivan Drury, director of insights at auto information website Edmunds.com Inc. "When there were sales, they were discounted. They were not as premium of a brand that was expected given as much anticipation there supposedly was on their return to market."
Good product can help to turn around a brand's image the way Hyundai Motor Co. and Kia Corp. have been able to move away from bargain reputations with offerings like the Telluride SUV, Drury noted. Stellantis' Italian brands have new product coming in the next few years, though the premium and luxury segments can be particularly challenging to break into because of their niche markets.
"If you want to charge high prices, there is only going to be a limited customer market for vehicles of that type at very high price points," said Sam Abuelsamid, an analyst for market research firm Guidehouse Inc. "If you want to get those higher price points, those higher margins, you've got to keep it relatively exclusive."
And for an automaker like Stellantis that has 14 brands, some are going to have to be more exclusive than others, Abuelsamid said, like how Volkswagen AG has upscale brands like Audi, Bugatti, Lamborghini and Porsche, in addition to its mass-market namesake.
Alfa Romeo: Premium
Alfa Romeo marked a proper return to the United States in 2014 after leaving the market in 1995. Still, with its lineup including the Giulia sedan and Stelvio SUV, it sold less than 10,000 vehicles in the first nine months of 2022 in the country. Sales of the new Tonale, sold in the United States exclusively as a plug-in hybrid, begin after the new year. That kicks off a series of annual launches for the brand as it looks to become all-electric by the end of the decade. The first fully electric offering will come in 2025.
"We’re very excited about the Tonale coming in," said Bill Golling, president of several Metro Detroit dealerships, including the Alfa Romeo and Fiat store in Birmingham, Michigan. "It marks an exciting time of change."
Pricing for the Tonale has not been announced. The Giulia and Stelvio start in the mid-$40,000s, with high-performance Quadrifoglio models costing more than $80,000.
Vincent Noirbent, Alfa’s vice president of product planning, emphasized earlier this month how the company is "cutting away from any volume-driven strategy" in North America. It's gotten rid of discounted leases and prices as it positions itself as Stellantis' global premium brand.
These Italian brands historically have been some of the most discounted vehicles Edmunds tracks, hurt by slim and aging product lines, Drury said: "The product lineup is how you convince somebody to have no discount."
There are other ways buyers can still get some relief: Skip Jones, sales specialist at Jake Sweeney Alfa Romeo in Florence, Kentucky, said he can get a 2.9% interest rate through Ally Financial and Chrysler Capital for 72 months on a '23 model, compared to 5% to 7% on the open market.
"Rates are coming into play," he said. "It's not so much the price of the car. If the price of the lease or payment gets to be too high, then you’re going to limit yourself even more. Leasing has slowed down because of the money."
The reduced-rate loan program is unique to Alfa and has been offered since the spring.
"Alfa Romeo," said Larry Dominique, senior vice president of the brand in North America, in a statement, "competes in the premium segment with different in-market programs that directly benefit our customers while maintaining competitive pricing."
Alfa customer Antonio Denkovksi, 28, of Macomb Township, Michigan, is looking to upgrade from his Giulia to a Stelvio, which his wife drives, after having a child. But he walked away without one from the dealership last week.
"We haven't agreed on a price yet," Denkovski said. He's paying in the low $400s monthly for his Giulia lease. Given inflation and economic worries, he thinks jumping to the high $500s is too far of a leap right now, though he's been happy with his ownership experience.
"They're known for unreliability, but I haven't had any issues," he said, noting he's owned three Alfas after discovering from a YouTube video in 2017 that the brand had returned to the United States. Denkovski gained an affinity for them when he lived in Macedonia. "I like the way it drives. It's pretty unique. I think it catches a lot of eyes. It's not very common. It stands out. And the styling, I like the way it looks."
It used to be a joke that if an Alfa wasn't dripping oil, it didn't have any in it, Jones said, but under Stellantis efforts to address quality have been a priority, from the factory floor to retailers. J.D. Power this year ranked Alfa as the top premium brand in its Sales Satisfaction Index, up from second to last a year ago. Electronic tablets have helped to smooth the delivery process. Dealers conduct quality checks when a car arrives at the lot and before it's taken to the customer.
"There’s a higher standard for any high-end vehicle, whether that's a BMW or Mercedes or Alfa Romeo," Jones said. "The buyers of higher-end European cars have higher expectations they hold the car to than other buyers. They're well-informed. They've done their homework."
Fiat: Fun to drive
Also shifting to target more affluent buyers is Fiat. Brought back in 2011 after leaving the U.S. and Canada in 1991, Fiat is down to selling one model here: the 500X crossover that made up a majority of the brand's 797 sales in the first nine months of 2022. Its base price is $27,965, well below the average new-car transaction cost of more than $48,000. Last month, brand CEO Olivier François shared that the all-electric 500e city car, which became the best-selling EV in Italy and Germany in the first half of 2022, will come to North America in 2024.
Dealers like Golling say they haven't any Fiats on the ground to sell as the industry still faces challenges from a global semiconductors shortage and other pandemic-induced supply-chain snags. More allocation is a welcome sign.
Uninterested in selling larger vehicles that Americans prefer in the competitive market, Fiat's focus will be wealthy urban city dwellers looking for parking ease and a secondary fun-to-drive option, François said. Volume will come from other regions like Europe and South America, and U.S. sales will focus on major metropolitan areas.
"I am not going to try to sell you a small car if you are replacing your midsize SUV and midsize sedan, not at all," he previously said. "No one needs us here if not with the 500."
That philosophy will position Fiat more like BMW's Mini over the inexpensive commuter car featured when it returned to the U.S. The company also is positioning itself as an experimental space in retail. Most recently, it launched a "metaverse" virtual-reality showroom for customers in Italy that attendees of the CES consumer electronics trade show in Las Vegas will be able to experience next month.
"They're not really looking to make that a volume brand," Abuelsamid said. "They’ve tried down that path. Clearly the market was saying, 'We’re not that interested in Fiat.' What they are deciding to do now is to reposition that brand as somewhat more mainstream and experiment with different kinds of products and business models.
"It's not ridiculously expensive, but not cheap. It's not competing with the likes of a Chevy Bolt. It’s not competing with Alfa Romeo either."
Maserati: Luxury
Maserati was the earliest reentry of the three to the United States in 2002 after leaving in 1991. Stellantis doesn't break out the luxury brand's U.S. sales by the quarter. Shipments totaled 10,800 vehicles in the first half of 2022 worldwide. It introduced the MC20 super sportscar in 2020, and the new Grecale SUV and the revived GranTurismo sportscar are the latest additions to its lineup. The GranTurismo Folgore model will be the brand's first to have a fully electric version.
In a virtual Q&A this month, Maserati CEO Davide Grasso emphasized efforts to improve reliability and customer service: "The key thing is that there’s no luxury without quality," he said, according to Barron's. "We can’t just 'push the metal' and focus on volume. Our goal is to exceed customers' expectations."
Maserati's North American offerings come with price tags befitting a luxury brand. The Grecale starts at $63,500, while the MC20's base price is an eye-watering $212,000. The GranTurismo's pricing has not been released.
At the higher end of the market, buyers tend to be less at risk from rising interest rates, Abuelsamid said. But given the exclusive nature of that segment, a brand has to offer something to make it stand out from the competition.
"It’ll be interesting what they do going forward with the GranTurismo," Abuelsamid said. "It's an EV that's got those classic Italian GT lines. It’s not called a GranTurismo for nothing as a grand touring car. We'll see how the market takes to that."
Americans tend to have a positive perception of Italian luxury brands, according to studies. The Stellantis brands hope in this next chapter, they can capture that affinity.
"It's fashion. It's a good design. It's a good way of life," Alfa's Noirbent said. "We have that sort of attractiveness."
