Another factor slowing the Giulia's launch, the sources said, is that Marchionne is not happy with the design proposals he's seen from Chrysler's U.S.-based stylists in Auburn Hills, Michigan, for the Giulia's two siblings, the replacements for the Chrysler 200 and Dodge Avenger, which are due in 2013. The timing of the three mid-sized models is linked because they will share a platform, powertrains and major subsystems.
Fiat owns 25 percent of Chrysler Group and is working to integrate the Italian and U.S. automakers.
With the Giulia stalled, the next all-new Alfa that European dealers will get is a compact SUV, which Fiat will start building at the end of next year in at Mirafiori plant in Turin. Code-named C-SUV, the model will be based on the replacement for the Jeep Compass/Patriot, which also will be produced in Mirafiori both for Europe and North America.
Until the SUV arrives in late 2012 to early 2013, Alfa will have just three model lines to sell, the MiTo, Giulietta and 159.Even struggling Saab, with two sedans (the 9-3 and 9-5) and two SUVs (the 9-4X and 9-7X, which has been discontinued but still shows up in Saab's European sales results), has a broader lineup than Alfa. By comparison, Europe's best selling premium brand, Audi, offers 11 model lines. Because of its broader product lineup and more global reach, Audi reported worldwide March sales of 125,700 cars and SUVs. That is 11 percent more than Alfa's total global sales for all of 2010.
A reason that Alfa's portfolio is so depleted is because at the end of last year it stopped making the four-seat GT coupe, 2+2 Brera coupe and the two-seat Spider roadster. The earliest any of those will be replaced is 2013.
Weak lineup, big losses
Philippe Houchois, head of European auto research at UBS in London, said Alfa has suffered from a lack of new products before.
This has contributed to the automaker's huge operating losses, which Houchois estimates equaled 15 percent to 20 percent of the Alfa's annual revenues -- or about 300 million to 500 million euros a year -- in the mid-2000s.
He believes Alfa's loses are now equal to about 10 percent of revenues – about 200 million euros – a year because its younger lineup includes the 1-year-old Giulietta and the 3-year-old MiTo.
Fiat does not release financial results by brand and declined to comment on the accuracy of Houchois' estimates.
Houchois said that the only way Alfa will make money in the future is if Fiat and Chrysler continue to increase their parts sharing, which will create more economies of scale.
Despite its small lineup, Alfa aims to boost its 2011 sales to 170,000 from 112,000 last year. Alfa expects to sell 100,000 units of the Giulietta compact, 60,000 MiTo subcompacts and 10,000 159 mid-sized cars this year.