Alfa Romeo CEO discusses product push, matching BMW on price

Soon after he helped merge PSA Group and Fiat Chrysler Automobiles to create Stellantis last year, CEO Carlos Tavares gave longtime lieutenant Jean-Philippe Imparato one of the toughest tasks in the new group: fix Alfa Romeo. Imparato's previous five years were spent at Peugeot, which he turned into a cash cow for PSA. He has had an immediate impact at Alfa, putting the chronic money loser into position to make a “positive contribution” to Stellantis' profit and loss sheet in the first half of 2021. This was achieved by de-emphasizing volume and focusing instead on more profitable sales channels to improve transaction prices and margins. Alfa's goal is to match BMW on price in every market where the brands compete. When Imparato arrived, his aging lineup included just two models, the Giulia midsize sedan and Stelvio midsize crossover. Alfa's first new model in six years, the Tonale compact SUV, goes on sale in June. Imparato shared his expectations for the new model and outlined his long-term plans for Alfa during an interview with Automotive News Europe Associate Publisher & Editor Luca Ciferri and Correspondent Andrea Malan last month at the company's museum in Arese, near Milan.
 
When you led PSA's Peugeot your pricing benchmark was Volkswagen brand. Does Stellantis follows this same plan and, if so, which brand is Alfa's benchmark ?

Stellantis follows the same pattern. Our pricing benchmark is BMW in every region. To me, pricing is not a selling tool, it's a lever to improve a brand's positioning. You can't build a premium brand if you are under pressure to reach high volumes. I'm lucky to have a boss [Stellantis CEO Carlos Tavares] who said, “I don't even speak about market share.” We focus on quality, margin per unit and pricing power. We want to be able to say we brought Alfa to the right level of technology, electrification, CO2 emissions while reaching an adequate profitability level. We must protect the reputation of the brand and of the Italian plants where Alfas are made. The factories in Cassino and Pomigliano can assemble cars at the right quality level.

Did Alfa make money last year?

We had a positive contribution to Stellantis' P&L in the first half. As far as the full year is concerned, we will announce results later this month.

What were the key changes you made last year to improve Alfa's bottom line?

We worked hard to clean up the sales channels. We ended 2021 with an OEM stock [inventory owned by the automaker] of just 1,200 units globally. That is about one week of sales. I want to keep a low stock both at the OEM and dealer levels, that is the best way to keep pricing at a profitable level.

With the Tonale, Alfa is finally offering a model that can travel on battery power only, the 275-hp plug-in hybrid variant. While it will be the Tonale's most powerful version, why does it have 25 hp less than the Peugeot 3008, a sister model from the same company from a brand that lacks Alfa's sporty heritage?

We will compete everywhere. And I can tell you the driving pleasure of the Tonale is worthy of a premium car in its segment.

How many Tonale plug-in hybrids do you expect to sell?

It's really difficult to say at the moment. The launch cadence will be the 130-hp full-hybrid gasoline first, followed by the 160-hp version; then the 130-hp diesel and 275-hp plug-in hybrid, which is due in October. That means, the plug-in hybrid will hit the market in 2023, at which time I want it to have a very high share. Much will depend on the CO2 regulations in each European market. In countries with strict CO2 rules the Tonale plug-in hybrid version's share might reach 80 percent. Another key factor is the CO2 level we have to reach within Stellantis' EU-wide strategy.

Where will the Tonale diesel be sold?

Where we can sell it. In Italy, diesels accounted for 46 percent of the compact SUV market, but it's a dwindling share. In Europe excluding Italy, diesels have a 25 to 30 percent share. In France the powertrain will disappear in a couple of years. Diesels will probably disappear in Europe with the arrival of Euro 7 regulations [which could take effect as early as 2025]. We won't invest on diesels to comply with Euro 7.

When will U.S. customers start getting the Tonale?

We'll start deliveries before year-end. The U.S. version will have a specific powertrain: a 2.0-liter turbo gasoline engine with 256 hp with a nine-speed automatic transmission coupled with four-wheel drive.

What will follow the Tonale?

Our strategy is to have either a new model launch or a significant product event each year until 2030. That gives us the best balance of efficiency and cash inflow. Alfa needs stability. We can't change strategy to follow every new trend. Next year we'll hold a big event supporting the business. We'll launch [an SUV below the Tonale] in 2024. It will be Alfa's first full-electric vehicle, but it will also offer versions with combustion engines. [The small SUV, likely to be called the Brennero, was originally expected in 2023]. We'll launch our first electric-only vehicle in 2025. Starting that year all new models will be 100 percent electric, worldwide.

As a Stellantis brand, Alfa's product planning is set for the five years at a time. Is this a rolling plan or is there an overall review for all brands at a given point?

They are rolling. This year we'll approve the 2023-27 plan.

Alfa's five-year product plan calls for five new models. In addition to the Tonale and the small SUV, there will be the replacements of the Giulia and Stelvio that will be underpinned by the STLA Large architecture, meaning they will be electric. Which segment are you aiming to cover with the fifth product?

We'll target a segment that is popular worldwide.

Does that mean large sedan or SUV?

We haven't made our choice. You have to account for changing market trends. We see the high-end segments, D and E [midsize and large], growing everywhere. That could be interesting for us, especially in the U.S. It might be a cross between a sedan and SUV. The main question is: Do we want to compete outside of Europe? Our answer is, “Yes.” The work done by the previous team to re-launch Alfa in the U.S. has great value. We have to stay in the U.S. To achieve that goal, the next-generation Giulia and Stelvio must fulfill U.S. market expectations for infotainment and electrification.

How long will the 3.0-liter V-6 gasoline engine survive in Europe?

Three to four years, no more than that. Starting in 2027, we only plan to sell full-electric vehicles globally. That's our strategy is based on the current proposed legislation in Europe that would require a 60 to 70 percent CO2 reduction by 2030. As we can't afford to keep two separate product lines, we have to make a choice.

Which Stellantis platforms will Alfa use?

The small SUV that will be made in Tychy, Poland, will be on an evolution of PSA's CMP platform. The Giulia, Stelvio and other Alfa products will be on STLA Large, unless we decide to make a compact hatchback [to succeed the Giulietta]. We haven't decided on that yet because the product is planned for 2027-28. We also have to look at what level of battery range will be enabled by the technologies available at that time.

Could STLA Large-based models have rear-wheel-drive versions?

The platform allows for both RWD and AWD.

Will STLA Large have an 800-volt electric architecture?

The voltage architecture will enable the charging rate we need. I don't want customers to have to wait 50 minutes at a charging station.

Last year you said Alfa wants to reach a price level of plus or minus 1 percent compared with German premium brand within three to four years. Where do you stand now and how will you achieve your goal?

Pricing power is the main lever, along with the right channel mix and adequate product quality. In the past Alfa made mistakes, from offering zero-kilometer [self-registrations] cars to discounts to push sales to keep the Cassino factory running. I think that the best way to kill a brand is to say it is linked to a plant. We stopped that.

Was it easier than expected to reduce inventory in 2021 because of the chip shortage?

Actually, the chip shortage did not hit Alfa much, as both Stellantis and the markets where we compete protected us from the worst impact. I don't know how 2022 will pan out, but our target is a maximum of one-month stock in the dealer network with 80 percent of our cars being built to order.

Last spring, your Alfa team had 49 members, nearly 100 percent of them Italian, and 40 percent female. The entire team was working in a building with fewer square meters than the surface of a tennis court at the Stellantis styling center in Turin. What's the situation now?

At year-end we were 51 people, all working on the same tennis court-sized space. We are very frugal.

How often do you physically go to your office in Turin?

I am there Tuesday to Thursday. Last year I spent 100 percent of my time there, as I wanted to signal that Alfa was back and I wanted to foster a team spirit with lots of personal interaction. Starting this year, I'll be traveling more often to meet people in our network and show them our future products. On top of this, every month I fly to Amsterdam for a meeting of the Stellantis board of management.