Re: US market overcrowded with brands???-----LONG AGAIN (sorry)

[Stacy Faught <slfaught@domain.elided>]

With all due respect, I'm gonna have to disagree again...

Let's say I'm a buyer in the $25k range (plus or minus $5k), and I 
want a sporty or image-type car (NOT a large market---more on that later).  
My current choices:  Acura NSX, Acura CL or TL, Audi A4, BMW 3 series (stripped),
Cadillac CTS (not likely, but in the market), Chrysler 300M (drive one before you scoff),
Chrysler PT Cruiser (especially the new GT/Turbo with 200+HP or the convertable),
Chrysler Sebring LXi, Dodge Neon SRT-4 (another 200+ HP compact),
Ford Focus SVT and Mustang, Honda Civic Si, Hyundai Tiburon, Infiniti G20,
Jaguar X-Type, Lexus IS300, Mazdaspeed Protoge, Mazda RX-8, Mercedes C (stripped),
MINI, Mitsubishi Eclipse/Spyder, Nissan 350Z, Nissan Altima SE, Pontiac Vibe GT, Pontiac 
Grand Am, Saab 9-3, Subaru Impreza, Toyota Matrix/Celica GT, Volkswagon Golf/Jetta/Beetle GTI, 
Volvo S40 and S60.

Obviously, most of these cars will fall right off the list for most of us, but the fact remains that
they compete for the same market segment---they all offer sporty performance to varying degrees,
and luxury ammenities to varying degrees....it depends on what you find important.

Also consider that out of the 16-17 million a year vehicle market, these models comprise only about
2 million annual sales, most of which is dominated by the Grand Am, 3 series, Eclipse, Sebring, 
Altima, and the Volkswagon trio.  You will definately grab some of those buyers with a $25-30k Alfa,
but remember that there are about 30 models competing for about 10% of the overall market.  
That is more crowded than any other segment, even the sport-utes.  I can probably pick out
at least 10 vehicles on that list that are faster (straight line, of course---but this is what most american
buyers want), or have more interior room, or have a more luxurious cabin, and a few of these would 
probably go quicker around a track (350Z, RX-8, WRX...mabye even the Neon SRT-4 but I doubt it).
Alfas are beautiful cars by comparison to most of the cars in the list, but styling is soooooo 
subjective---even as much as I love the Alfa brand cues, I think the current Spider/GTV is 
atrociously ugly, simply because I feel the accent line that runs along the side to the rear middle brake light
makes the real wheels look too small, and the rear quater look slab-sided.  The interior is a work of
art, however  :)

This belies the real point to my original post, however.  If it had a 3 pointed star or a blue and white propeller, 
you'd easily sell 50-100k 147's here per year.  As an Alfa owner, however, I think we've all had numerous 
experiences with random people in the parking lot that go something like this: 
"Wow, nice spider/gtv/ect."
"Thanks, I really love this car."
"Must cost you a fortune to maintain it."

Bottom line is that Alfa has a downright awful reputation for reliability in this country, as the common person
lumps them in with old Fiats, Renaults, and MG's.  The young, affluent buyers they would be shooting for
are too young to remember Alfa's racing heritage, so you're selling on style alone, for the most part.
They would probably struggle to sell 30k a year, at least in the beginning 5 years, until the quality reputation
takes hold.  And the margin for error here is razor-thin....If it breaks down once, no problem; but if it breaks
down twice, they will get rid of it and go buy something else.

Considering that Fiat is on pace to lose one billion euros this year (i believe the euro to dollar rate is more or less 1 to 1),
and rumor has it that they are considering pulling out of some fringe markets, I just don't see them investing the
$300 million or so that it would cost to return here (that number is based on published reports of Ferrari's investment
in returning Maserati to the US).  It would take a decade of 100-200k per year sales to make that back, assuming the
usual profit margin for cars in the $20-$35k range.  Hyundai did it because they can build a car for a thousand bucks in Korea,
and sell it for $13k here, and still offer a competitive car (note that they are losing money here still, even selling 300k per year...).
Maserati can do it due to the fact that they can make $20k profit per car easliy in the price range they sell for.

Which brings me to another point---I think the best opportunity for Alfa's return is through the Ferrari/Maserati connection,
if Maserati can make an impact here.  The dealer network is established (if small), and putting Alfas in with higher-priced
sports cars will be a real image boost, along with the reputation of luxury dealership service.  But Maserati is not expected
to turn a profit until 2004 and a decision to return (if made at that time) would mean no Alfas here until '08 or '09.
I'm not sure you could convince Ferrari execs that it would be good for them to do this, either, which you would have to do
if Fiat exercises the put option and sells Fiat Auto to GM, since Ferrari/Maserati is not part of Fiat Auto, and would remain with Fiat.

Don't look to GM to bring Alfa back---they are still struggling to justify the cost of buying Saab for which they have nothing
to show but disapointing sales of 40k a year (initial estimates were that GM could get Saab up to 200k a year).  
With Lutz at the helm there, he will look to transform Cadillac, Saab and Pontiac to fill the niche of the $25-40k sporty/entry luxury market.
Remember, this is the same guy who starved Plymouth of new designs, causing the eventual demise of the brand because
the market segment overlapped with Chrysler offerings.  Also remember that this is a company that wants to make money,
and they make about $10k per vehicle selling trucks with station wagon bodies to the uneducated masses, AND they 
lobby EXTENSIVELY to keep the EPA regulations such that they can keep the money machine crankin.
Cars have taken a total back seat, and for good reason---bonuses are tied to profit, all the way from the execs to the
union guys on the assembly line.  GM also requires that half of an employees' 401k investment be placed in GM stock for at least
a year, so almost every employee at that place wants nothing more than to sell a gizillion SUV's, use the windfall to retire early,
buy a house in Florida and restore old muscle cars.  There is really very little interest in bringing Alfa Romeo to the US, financially
speaking.

It sucks, but there you have it.

That said---if you've got $90,000 laying around, go buy a Maserati :)

Write letters to congressmen, encouraging them to loosen grey market import laws, so we can take a trip across the pond 
and come home with an Alfa.  If it's good enough for EU regs, it should be good enough for ours.  

Please note too that these are my own opinions based on personal experience and low-level industry friends, and in no way
represent any sort of insider information, corporate policy or any sort of confidential information--don't go buying and selling 
stocks and such based on my ramblings :)


>Ya just gotta be kidding. The US market has very little variety for decent
>passenger cars.
>
>I posted a few weeks ago to the effect that of the dozen sub $30,000.00
>cars available in the US market in 2003 model year no less than five were
>from VW/Audi and based upon the same drivetrain choices and two floorpans.
>
>Excess variety of models to choose from is definitely NOT the problem.
>
>Too many damn trucks supported by ridiculous legislation is definitely the
>problem.
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