MILAN – Alfa Romeo will deliver an operating margin of several hundred million euros this year, CEO Jean-Philippe Imparato said, a substantial turnaround for a brand that was losing money ahead of the formation of parent company Stellantis in 2021.
Stellantis does not report financial results for most of its individual brands. Imparato declined to be more specific about profits, adding only that that Alfa Romeo would sell 70,000 to 80,000 cars globally this year, about 30 percent more than 2021 and 2022.
About 60 percent of those sales will come from the new Tonale compact SUV, which Imparato said "delivers the level of profitability Alfa needs."
The Tonale’s run rate is currently about 6,000 units a month, or about 70,000 a year, with U.S. buyers getting only a 285-hp plug-in hybrid variant after a planned turbo option was dropped for fleet fuel economy reasons. European buyers can also get mild-hybrid and diesel versions.
Imparato, a former CEO of Peugeot, has been given the job of revamping Alfa Romeo’s lineup and business plan under Stellantis.
The brand, which is part of Stellantis’ premium cluster with DS and Lancia, has three models: the Tonale, launched in the second half of last year in Europe and 2023 in North America ; the Stelvio midsize SUV and the Giulia midsize sedan, both of which are on the Fiat Chrysler Automobiles Giorgio platform.
Next year, Alfa Romeo will launch its first full-electric model, the Milano small SUV. Every new model launched after 2025 will be full-electric only, with sales of combustion-engine models ending by 2027.
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The Milano will be followed in 2025 and 2026 by two full-electric models based on the STLA Large architecture that will replace the Giulia and Stelvio, Imparato told Automotive News Europe. They will be built in Stellantis’ factory in Cassino, central Italy, which now assembles the Giulia and Stelvio.
Imparato would not say which of the two models will come first. In Europe, Giulia sales are down 9.3 percent to 4,322 units through October, while the Stelvio is down by 27 percent to 10,320 units, figures from market researcher Dataforce show.
The Tonale registered 27,928 sales in that period, and the brand’s sales in Europe were up by 5.1 percent to 42,607 units in the first 10 months.
In 2027 Alfa will launch a large EV that will become the brand’s flagship. "We have been working on its design for over two years and we are almost there, you will be impressed, trust me," Imparato said.
Reducing complexity, fixing quality issues
Carlos Tavares, the CEO of Stellantis, asked Imparato to take over Alfa Romeo after seven years at the helm of the Peugeot brand. Alfa Romeo had been a chronic money loser under Fiat Chrysler Automobiles, and Imparato said he found several things to fix quickly.
"The first time I went to Cassino, I discovered there where about 4,000 options – including 47 wheel rims – and I cut them to 1,500 to reduce complexity," he said.
The Tonale was also set to be launched as a diesel with manual transmission. Imparato revised the strategy to launch it as a plug-in hybrid gasoline model with an automatic transmission.
"I also found that quality was not where it should have been, so I delayed the launch by six months to fix quality before beginning production," he said.
Imparato says his push to improve the quality of Alfa models has paid off, and warranty costs have been halved.
In the U.S., Alfa Romeo ranked as the No. 1 premium brand, and the Stelvio No. 1 in its segment, in the J.D. Power 2023 initial quality survey.
Alfa Romeo’s improvement, reducing the problems per 100 units by 68 to 143, was the second-best improvement after fellow Stellantis brand Maserati, which improved by 73 problems per 100 units to 182. Overall, the average score worsened to 192 from 180 in 2022 and 162 in 2021.
Doubling profitability
After he took over at Alfa Romeo in January 2021, Imparato increased prices by about 5,000 euros and reduced sales to less-profitable channels such as rentals and self registrations.
Alfa Romeo, like other brands, received a boost from the covid-related semiconductor shortage, which led to increased new and used car prices. The brand was earning an additional 4,000 to 5,000 euros on vehicles coming off lease, Imparato said.
He said that the combination of higher prices, better quality (and thus reduced warranty cost) and higher residual values put Alfa Romeo back in the black in the second half of 2021.
"Since then, we have been doubling our profitability year after year," he said. Imparato added that profits and quality matter more for a premium brand than volume.
EV-only by 2027
Imparato said Alfa Romeo’s five-year product plan is called "From 0 to 0," meaning that the company will move from having no electric models in 2022 to being only electric by 2027.
The Milano will be the last model to also offer a combustion variant. From 2025, all new Alfas will be launched electric only – starting with the Giulia and Stelvio replacements - and from 2027 Alfa will sell only electric models.
Imparato has also revised Alfa Romeo’s naming strategy. He chose Milano as a name for the new small SUV rather than Brennero, as reported earlier, moving away from names of Italian mountain passes for its SUVs, as with the Stelvio and the Tonale. He said that Giulia and Stelvio will keep their names for their replacements.
