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VW Should Dump SEAT And Replace It With Alfa Romeo

Bernstein’s Warburton, With No Evidence, Calls This A Neat Idea
It Would Appeal To Piech’s Heritage Fascination

Fiat’s plans for Chrysler have taken the spotlight away from its troubled sporty subsidiary Alfa Romeo, but Max Warburton, senior analyst at Bernstein Research, has an interesting theory.

Might Volkswagen board chairman Ferdinand Piech be interested in buying it?

Warburton reckons that recent remarks from Fiat CEO Sergio Marchionne suggest he is losing patience with Alfa, which has promised much but delivered little in the last couple of decades. Alfa currently loses between €300 and €400 million a year, according to Warburton.

Marchionne has promised he will decide early in the New Year what plans he has for Alfa, but the future of the top of the range 159 looks to be in jeopardy. Possibly, the 159 could be replaced by a Chrysler based vehicle, which could then also lead to the rejuvenation of the bigger 166. Or perhaps the 159 and 166 would be dropped, leaving the new Giulietta (the 147 replacement on sale in March 2010), the MiTo, the Brera coupe, Spider and GT Coupe.

Bernstein Research’s Warburton emphasises the fact that his theory is just that, but he speculates that Piech, who has orchestrated VW’s purchase of other brands with more emotional appeal than business sense like Bentley, Lamborghini and Bugatti, might find Alfa appealing. Apparently Piech’s grandfather Ferdinand Porsche was close to a founder of Alfa Romeo, Rudolf Hruska in the 1930s.

Long, rich history
Warburton describes Alfa Romeo as one of Europe’s most powerful brands, with a long and rich history of motorsport and road car success. Marchionne re-launched Alfa in 2005 hoping it would double in size to 300,000 sales a year, but in 2008 sold barely over 100,000.

“With the right product, quality and distribution, surely Alfa could be successful,” says Warburton.

“A MiTo replacement could be dropped onto the Polo platform (arguably superior to the Punto); a 149 replacement could be dropped onto the Golf platform (definitely superior to the Bravo and a two million platform vs Bravo’s uneconomic 100,000); a 159 replacement could be rushed through, based on the Passat platform; Audi could launch high end models again on Audi car and SUV platforms,” muses Warburton.

Where would Alfa sit in the VW hierarchy? Dump SEAT, he says.

“It’s pretty simple in our view – VW could kill the SEAT brand and re-launch it as Alfa. Former VW CEO Bernd Pischetsrieder used to say that he wanted to turn SEAT into a “Mediterranean, emotional, sporting brand – VW’s Alfa Romeo”. Rather than imitate, why not just actually become Alfa Romeo? Although SEAT now has decent quality, in our view it has no brand history or value,” Warburton said.

Optimistic buyer
Warburton says because Alfa is losing so much money with no short-term salvation likely, Marchionne might be well served to pay someone to take it away. But he speculates that Alfa could be worth between €700 million to €1.3 billion to an optimistic buyer.

That’s a good note to end 2009 on; the idea that there might still be optimistic buyers of car manufacturers out there.

Neil Winton – December 15, 2009

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