Alfa Romeo

views updated May 29 2018

Alfa Romeo

Fiat S.p.A.
Corso Marconi 10
Turin
Italy
Telephone: (+39) 1165651
Fax: (+39) 116863525
Web site: http://www.alfaromeo.com

Wholly Owned Subsidiary of Fiat S.p.A.
Incorporated:
1910 as Società Anonima Lombarda Fabbrica Automobili
Employees: 1,500
NAIC: 33611 Automobile Manufacturing

Alfa Romeo is one of the most famous sports cars in the world, along with Porsche, Ferrari, Maserati, Corvette, Lamborghini, and Jaguar. After experiencing severe economic difficulties during the early 1990s, which resulted in the companys pullout from the U.S. market, Alfa Romeo and its parent company, Fiat, have performed a turnaround of the legendary carmakerbooking international success with the 156 model, introduced in 1998 to universal acclaim, followed by the 166 sedan. In 2000 the company prepared for more success with the October launch of the 147. Alfa Romeos renewed success has not been enough for Fiat, however, which saw losses totaling more than US$100 million in 1999. In March 2000, Fiat announced a share-swap partnership agreement with General Motors Corporation (GM), giving the U.S. carmaker 20 percent of Fiat and making Italys dominant automaker the largest single GM shareholder, with 5.1 percent of the Detroit company. The GM-Fiat agreement has already produced a bonus for Alfa Romeofollowing the agreement, Fiat announced its intention to reintroduce Alfa Romeo to the U.S. market with a new Spider design.

Founding an Automotive Legend in 1910

Alfa Romeo was founded in Portello, just north of Milan, in 1910. Cav Ugo Stella, managing director of a Portello assembly plant for the Darracq, a French automobile, decided to organize a group to purchase the plant and build a car more suitable for the harsh and mountainous Italian roads. Along with a few Milanese businessmen, he took out a loan to purchase the Darracq plant. The group named itself the Lombardy Car Manufacturing Company (Societa Anonima Lombarda Fabbrica Automobili) and soon was known by its initialsALFA.

Ugo Stella hired Giuseppi Merosi as chief automotive de-signer of the new company. Merosi had worked previously as a designer for Marchand, Fiat, and Bianchi car companies and was well qualified to design both touring cars and cars for the racing circuit. His first design for ALFA included a monobloc engine, high tension magneto ignition, three-bearing crankshaft, side valves, and pressure lubrication. A radiator badge also was designed for the new firms cars, including the soon-to-be famous red cross and snake, symbols that were part of the emblems of the city of Milan and the Visconti family. A blue border surrounded the edge of the circular badge, with the word ALFA at the top and MILANO at the bottom. First inscribed in brass lettering, the lettering was replaced shortly afterward with white enamel. During the first year of business, ALFA manufactured ten cars each of a 12 horsepower and a 24 horsepower model; one year later, production had increased to 40 cars of each model. By the time World War I began in 1914, ALFA was manufacturing 272 chassis a year with a staff of almost 300.

Although revenues from car sales seemed to provide adequate funds for ALFA to continue business, in 1915 the company was acquired, suddenly and surprisingly, by Nicola Romeo. From rather humble beginnings, Romeo had graduated from the University of Liège with a degree in electrical engineering. After working for a short time in Germany and then France, he returned to his native Italy and started a business in Milan in association with the American company Ingersoll-Rand. Romeos business was so successful that he soon formed his own firm to manufacture mining equipment. This, too, proved successful; the expansion of his company was so rapid, that the number of employees he hired increased from 100 to more than 1,200 in three months during the summer of 1915.

When Romeo purchased ALFA in 1915, there were fears among the remaining management and workers that the company was doomed for extinction. Romeo had purchased not only ALFA, but also numerous other firms in the area. His goal was to create an engineering combine that manufactured compressors, tractors, air brakes, ploughs, railway equipment, and other assorted products for use in heavy industry. Fortunately, Romeo was also a motoring enthusiast and had always dreamed of making a prestigious Italian sports car. As a result, he immediately expanded the production facilities at the ALFA factory in Portello. In February 1918, he changed the name of the firm to Società Anonima Italiana Ing. Nicola Romeo & Company. In addition, he decided to place his own name next to the well-respected ALFA name on the companys radiator badge, and after 1918 all the firms cars appeared with Alfa Romeo on the hood.

During the 1920s Alfa Romeos on the racing circuit established the company as one of the premier sports car manufacturers in the world. Alfa Romeo relied heavily on modified versions of its prewar racing cars, while designer Merosi labored frantically to design more up-to-date models. As Merosis new designs were introduced on the raceways, the company began to win such prestigious competitions as the Parma-Berceto, the Consuma Hill Climb, the Coppa Florio, the Aosta-Great St. Bernard Hill Climb, the Autumn Grand Prix, the Circuit of Savio race, the Circuit of Mantua race, the European Grand Prix, and many, many more. Nicola Romeo was determined to wrest the European racing crown from Italian competitor and rival Fiat, and he employed the best drivers and mechanics in order to do so. Enzo Ferrari, who was to become famous in his own right as an Italian sports car manufacturer, won the 1927 Circuit of Modena in a six-cylinder 150 Alfa Romeo. As Alfa Romeo continued to win races, the innovations that led to the successes of the racing cars directly affected the design and production of the companys touring cars and roadsters; for example, front wheel brakes, adapted from the Alfa Romeo racing cars, were installed on touring cars for the first time.

Vittorio Jano, who replaced Merosi as head of design at Alfa Romeo in 1926, continued the tradition of improving the companys cars through his creations for the racing circuit. Janos first design for general production was the NR (Nicola Romeo) touring car, which included a single overhead camshaft, coil ignition, a four-speed gearbox, and rod-operated brakes. Despite the growing success and reputation of the company, Nicola Romeo suddenly and inexplicably retired in 1928, and management of the company was assumed by the board of directors. Unfortunately, the firm began to experience financial difficulties as soon as Romeo retired.

During the early 1930s, management changed the name of the firm from Ing Nicola Romeo and Company to Societe Anonomie Alfa Romeo. Alfa Romeos revenues continued to diminish, and in 1933 the government-sponsored Istituto Riconstruzione Industriale (IRI) assumed control of the company. Although Alfa Romeo technically retained its status as a private corporation with its own board of directors, the company had essentially been nationalized. Under the auspices of IRI, and with the rise of Benito Mussolini as dictator of Italy, Alfa Romeos production facilities at Portello were expanded to include airplane engines, armaments, diesel engines, and even light aircraft. Jano continued to design touring cars and racing cars for the company through the mid-1930s, but car production became less and less important as Mussolini prepared Italy for war.

Alfa Romeos fortunes during World War II slipped even further. In 1936 a Spanish engineer by the name of Wilfredo Ricart was hired to replace Jano as head of the design office at Alfa Romeo. Ricart had extensive experience designing diesel engines and sports and racing cars and also had organized public transportation in the city of Valencia before arriving in Italy. Expectations of his potential for designing Alfa Romeo cars were very high. But Ricart, it was soon discovered, exhibited some very strange habits, including a penchant for wearing enormously thick rubber-soled shoes. When asked by Enzo Ferrari why he affected these shoes, Ricart replied in all seriousness that a geniuss brain must be cushioned against the harsh unevenness of the ground lest its delicate mechanics be disrupted. Upon hearing Ricarts response, Ferrari left Alfa Romeo. During the war years, Ricarts designs for the company never went beyond the prototype stage.

Postwar Reconstruction

After the end of World War II, Alfa Romeos factory at Portello needed rebuilding because of the damage inflicted by American and British bombing raids. At the same time, the companys board of directors decided to release Ricart from his contract and hire Orazio Satta to replace him. Satta was the last of the great Alfa Romeo designers. Educated as an aeronautical engineer, Satta guided the company into an era of racing success and economic prosperity. Satta was responsible for designing the 6C 2500 Super Sport, the 1900 Sprint, the Giulietta Sprint Special, and the famous Spider Veloce. All of these cars sold extremely well abroad, with the Spider Veloce selling especially well in both Britain and the United States. During Sattas tenure, Alfa Romeo also continued to be successful in racing, winning such prestigious races as the 1950 and 1951 Swiss Grand Prix and the 1953 Grand Prix of Supercortmaggiore at Merano.

Company Perspectives

Alfa Romeos ninety years of existence encompass some of the most important chapters in motoring history. It is a story of cars, designers, races, and engines that stand as techno-logical and sporting milestones of the twentieth century. A brand such as Alfa Romeo is the sum of all these parts, and also of the work and professional pride of the thousands of peopleengineers, workers and managerswho have succeeded one another in its factories and offices and on the racing track.

Alfa Romeos are still not made for people who believe driving is boring and see cars only as a means of getting from A to B. They are built to transcend the essential and enter the realm of emotion. They embody aesthetic taste, a passion for sophisticated engineering, the pleasure of sitting behind a driving wheel and the desire to express ones own personality.

By the early 1960s, the factory at Portello was unable to produce enough cars to suit the growing demand of Alfa Romeo customers, so the company built a new assembly plant at Arese, about ten miles from Portello. In 1963 the first Giulia Sprint GT rolled out of the plant at Arese, and by 1970 manufacturing capacity had increased to 150,000 automobiles per year. Still striving for the best performance from its vehicles, the company built a test track at Balocco, west of Milan. Numerous prototypes were tested on this track, and Sattas reputation as a designer continued to grow with each successful production. As sales increased, Alfa Romeo laid the foundation for a new plant just outside Naples, the place of Nicola Romeos birth.

In 1970 Alfa Romeo sold 109,598 cars worldwide, primarily in Europe and the United States. The company was at the height of its success, with a growing share of the sports car market in every country where it sold cars. When Satta retired, accolades were heaped upon him, both by his peers and by the Italian government. After Sattas retirement, however, Alfa Romeo began to experience managerial and financial problems. Rising production costs and increased competition from Ferrari, Maserati, Jaguar, Porsche, and American car manufacturers led to declining revenues. In addition, the tradition of testing new Alfa Romeo models through the racing circuit was growing less important to the design office, and technical problems began to occur in cars purchased by customers expecting high levels of performance. By the early 1980s, the manufacturers financial position had deteriorated so rapidly that the state-owned holding company Finmeccanica had taken control of the Alfa Romeo factories.

Under the auspices of Finmeccanica, Alfa Romeos fortunes fared no better. Management was unable to stop the companys financial hemorrhaging and, as a result, Alfa Romeo became an attractive takeover target. Ford Motor Company expressed interest, but in 1986 Fiat outbid Ford, acquiring Alfa Romeo and all its holdings for US$1.75 billion. Fiat, a well-established Italian car manufacturer owned by the Agnelli family, regarded Alfa Romeo as the perfect complement to its own line of European sports cars.

Alfa Romeo benefited from Fiats largesseFiat decided to invest more than US$1 billion in rehabilitating and improving the companys manufacturing plants in Portello, Naples, and Arese, while more than US$1.25 billion was earmarked for research and development. Yet Fiats direct management and supervision of Alfa Romeo car production and distribution was unable to reverse the companys fortunes. In 1989 Fiat formed Alfa Romeo Distributors of North America, a 5050 joint venture with Chrysler. This arrangement, it was hoped, would enable Alfa Romeo to increase its presence in the American automobile market. Since Alfa Romeo had sold 8,201 cars in 1986 in the United States, it was not an unwarranted prediction that annual sales would increase to 12,000 by 1991. With new designs ready to roll from the companys Italian factories, Chrysler and Fiat were even confident enough to project annual sales figures of US$40,000 to US$50,000 by 1995. Fiat de-pended on Chryslers knowledge of the American car market and gave Chrysler management a free hand in advertising and distributing Alfa Romeo cars.

Falling and Rising in the 1990s

From the beginning of the collaboration, however, almost nothing went according to plan. The first Alfa Romeo car produced under Fiat ownership, the 164 sedan, was delayed so that Fiat engineers could improve its quality and add a 2.0-liter turbo engine. The delay lasted months longer than expected, and distributors in the United States were left with nothing to sell except the Milano sedan and the old version of the Spider convertible. Unfortunately, the Alfa Romeo Milano, another design significantly influenced by Fiat engineers, was plagued with mechanical problems and quickly developed a reputation for unreliability. Chrysler, dissatisfied with the results of the joint venture, decided to dissolve the partnership in 1991. Chryslers withdrawal left Fiat to market Alfa Romeo cars alone in the United States and, as a result, Alfa Romeos presence in the United States began to decline dramatically. During 1991 only 649 Alfa Romeo cars were sold in the United States.

In an attempt to improve Alfa Romeos dwindling market share, Fiat engineers conceived the 155, introducing the car in Europe in 1992. The car did not sell well, however, which industry analysts attributed to the lackluster exterior and interior design. With earnings decreasing and debt rising for its U.S. operation, Fiat decided not to export the 155 to the United States. In 1993 Alfa Romeos car production dropped 24 percent to only 109,598 units, most of which were sold in Europe. A decision by Fiat management not to sell the new Spider convertible, the Spider coupe, or the newly designed 145 hatchback in the United States confirmed the companys decision to pull out of the U.S. market.

Key Dates

1910:
Società Anonima Lombarda Fabbrica Automobili (Alfa) is founded.
1915:
Nicola Romeo acquires Alfa.
1918:
Changes name to Società Anonima Italiana Ing. Nicola Romeo & Company; production of first Alfa Romeo cars.
1930:
Company changes name to Société Anonomie Alfa Romeo.
1933:
Italian government takes control of Alfa Romeo.
1960:
Construction begins on new assembly plant in Arese.
1963:
Launch of Giulia Sprint GT model.
1980:
State-owned Finmeccanica acquires Alfa Romeos factories.
1986:
Fiat acquires Alfa Romeo.
1989:
Establishes Alfa Romeo Distributors of North America joint venture with Chrysler.
1993:
Alfa Romeo is pulled out of American market.
1998:
Company launches 156 sedan.
1999:
Company launches 166 sedan.
2000:
Fiat enters partnership with GM, announces return of Alfa Romeo to U.S. market by 2004.

Nonetheless, Fiat had far from abandoned the legendary Alfa Romeo name. Throughout the 1990s, the company initiated a retooling of the Alfa Romeo, aimed at winning back customers through an increased commitment to quality in manufacturing as well as a return to the design excellence that had built the Alfa Romeo name. By 1998, Alfa Romeo was officially back: in that year the companys new 156 sedan won the European Car of the Year award, sparking a rush of orders. By the end of 1998, the success of the 156 was confirmed, with orders nearing 200,000 cars from 60 countries.

Alfa Romeo celebrated its 90th anniversary in 1999 with another success, the launch of the 166 sedan, designed to compete in the same class as the Mercedes E series. The 166 proved as successful as the 156, and in Europe, at least, Alfa Romeo had once again become a favorite among car buyers. The return of the Alfa Romeo image was not enough to rescue the failing Fiat, however. After posting losses of more than US$100 million in 1999, Fiat acknowledged that it was seeking a partner automotive company.

In March 2000, the company reached a partnership agreement with General Motors. In a share-swap agreement, which gave GM 20 percent of Fiat and Fiat 5.1 percent of GMmaking the Italian company the largest GM shareholderthe two companies announced their intention to join forces to enhance their positions in the European and Latin American markets. At the same time, Fiat acknowledged its intention to return Alfa Romeo to the U.S. market as early as 2004, with a new Spider model especially designed for the U.S. car market. With the backing of Fiat, Italys largest industrial concern, and GM, the worlds largest automaker, the Alfa Romeo name seemed certain to continue thrilling sports car enthusiasts well into the 21st century.

Principal Competitors

AUDI AG; Bayerische Motoren Werke; DaimlerChrysler AG; Ford Motor Company; Honda Motor Company Limited; Hyundai Group; Isuzu Motors, Ltd.; Kia Motors Corporation; Mazda Motor Corporation; Mitsubishi Motors Corporation; Nissan Motor Company; Peugeot S.A.; Porsche AG; Renault S.A.; Saab Automobile AB; Suzuki Motor Corporation; Toyota Motor Corporation; Volkswagen A.G.

Further Reading

Ciferri, Luca, Fiat Performs CPR to Revive Alfa Romeo, Automotive News, May 16, 1994, p. 26.

Green, Gavin, Alfa Romeo Keeps Good Times Rolling, International Herald Tribune, December 4, 1998.

Henry, Jim, Fiat Weighs Alfas Fate in U.S., Automotive News, July 5, 1993, p. 4.

Kiley, David, Fiats Alfa Romeo May Return to USA, USA Today, June 22, 2000, p. 6B.

Pitt, Barrie, Alfa Romeo, New York: Ballantine Books, Inc., 1971.

Wielgat, Andrea, Europes Comeback Kid, Lighting Dimensions, February 1, 1999.

Thomas Derdak

updated by M.L. Cohen

Alfa Romeo

views updated May 29 2018

Alfa Romeo

Fiat S.p.A.
Corso Marconi 10
Turin
Italy
011 39 11 65651
Fax: 01l 39 11 6863525
Alfa Romeo Distributors of North America
P.O. Box 598026
Orlando, FL 32859
U.S.A.
(407) 856-5000

Wholly Owned Subsidiary of Fiat S.p.A.
Incorporated:
1910 as Societa Anonima Lombarda Fabbrica
Automobili
Employees: 1,500
SICs: 5012 Automobiles & Other Motor Vehicles; 5013 Motor Vehicle Supplies & New Parts

Alfa Romeo is one of the most famous sports cars in the world, along with Porsche, Ferrari, Maserati, Corvette, Lamborghini, and Jaguar. Unfortunately, Alfa Romeo and its parent company, Fiat, have experienced severe economic difficulties during the early 1990s. Although Alfa Romeo accounted for over 50 percent of Fiats domestic sales in Italy during 1990, Alfa Romeos market share in the United States has continued to dwindle over the years. As a result, Fiat management has decided not to sell models of the new Spider convertible and new Spider 165 sedan in the United States. This decision will significantly alter the manner in which Alfa Romeo sells cars in North America.

Alfa Romeo was founded in Portello, just north of Milan, in 1910. Cav Ugo Stella, managing director of a Portello assembly plant for the Darracq, a French automobile, decided to organize a group to purchase the plant and build a car more suitable for the harsh and mountainous Italian roads. Along with a few Milanese businessmen, he took out a loan to purchase the Darracq plant. The group named itself the Lombardy Car Manufacturing Company (Societa Anonima Lombarda Fabbrica Automobili), and was soon known by its initialsALFA.

Ugo Stella hired Giuseppi Merosi as chief automotive designer of the new company. Merosi had previously worked as a designer for Marchand, Fiat, and Bianchi car companies, and was well qualified to design both touring cars and cars for the racing circuit. His first design for ALFA included a monobloc engine, high tension magneto ignition, three-bearing crankshaft, side valves, and pressure lubrication. A radiator badge was also designed for the new firms cars, including the soon-to-be famous red cross and snake, symbols that were part of the emblems of the city of Milan and the Visconti family. A blue border surrounded the edge of the circular badge, with the word ALFA at the top and MILANO at the bottom. First inscribed in brass lettering, the lettering was shortly afterward replaced with white enamel. During the first year of business, ALFA manufactured ten cars each of a 12hp and a 24hp model; one year later, production had increased to 40 cars of each model. By the time World War I began in 1914, ALFA was manufacturing 272 chassis a year with a staff of almost 300.

Although revenues from car sales seemed to provide adequate funds for ALFA to continue business, in 1915 the company was suddenly and surprisingly acquired by Nicola Romeo. From rather humble beginnings, Romeo had graduated from the University of Liege with a degree in electrical engineering. After working for a short time in Germany and then France, he returned to his native Italy and started a business in Milan in association with the American company Ingersoll-Rand. Romeos business was so successful that he soon formed his own business to manufacture mining equipment. This business was so successful, and the expansion of his company was so rapid, that the number of employees he hired increased from 100 to over 1,200 in three months during the summer of 1915.

When Romeo purchased ALFA in 1915, there were fears among the remaining management and workers that the company was doomed for extinction. Romeo had not only purchased ALFA, but also numerous other firms in the area. His goal was to create an engineering combine that manufactured compressors, tractors, air brakes, ploughs, railway equipment, and other assorted products for use in heavy industry. Fortunately, Romeo was also a motoring enthusiast and had always dreamed of making a prestigious Italian sports car. As a result, he immediately expanded the production facilities at the ALFA factory in Portello. In February 1918, he changed the name of the firm to Societe Anonima Italiana Ing. Nicola Romeo & Company. In addition, he decided to place his own name next to the well-respected ALFA name on the companys radiator badge, and after 1918 all the firms cars appeared with Alfa Romeo on the hood.

During the 1920s Alfa Romeos on the racing circuit established the company as one of the premier sports car manufacturers in the world. Alfa Romeo relied heavily on modified versions of its prewar racing cars, while designer Merosi labored frantically to design more up-to-date models. As Merosis new designs were introduced on the raceways, the company began to win such prestigious competitions as the Parma-Berceto, the Consuma Hill Climb, the Coppa Florio, the Aosta-Great St. Bernard Hill Climb, the Autumn Grand Prix, the Circuit of Savio race, the Circuit of Mantua race, the European Grand Prix, and many, many more. Nicola Romeo was determined to wrest the European racing crown from Italian competitor and rival Fiat, and he employed the best drivers and mechanics in order to do so. Enzo Ferrari, who was to become famous in his own right as an Italian sports car manufacturer, won the 1927 Circuit of Modena in a six-cylinder 150 Alfa Romeo.

As Alfa Romeo continued to win races, the innovations that led to the successes of the racing cars directly affected the design and production of the companys touring cars and roadsters; for example, front wheel brakes, adapted from the Alfa Romeo racing cars, were installed on touring cars for the first time.

Vittorio Jano, who replaced Merosi as head of design at Alfa Romeo in 1926, continued the tradition of improving the companys cars through his creations for the racing circuit. Janos first design for general production was the NR (Nicola Romeo) touring car, which included a single overhead camshaft, coil ignition, a four-speed gearbox, and rod-operated brakes. Despite the growing success and reputation of the company, Nicola Romeo suddenly and inexplicably retired in 1928, and management of the company was assumed by the board of directors. Unfortunately, the firm began to experience financial difficulties as soon as Romeo retired.

During the early 1930s, management changed the name of the firm from Ing Nicola Romeo and Company to Societe Anonomie Alfa Romeo. Alfa Romeos revenues continued to diminish, and in 1933 the government-sponsored Istituto Riconstruzione Industríale (IRI) assumed control of the company. Although Alfa Romeo technically retained its status as a private corporation with its own board of directors, the company had essentially been nationalized. Under the auspices of IRI, and with the rise of Benito Mussolini as dictator of Italy, Alfa Romeos production facilities at Portello were expanded to include airplane engines, armaments, diesel engines, and even light aircraft. Jano continued to design touring cars and racing cars for the company through the mid-1930s, but car production became less and less important as Mussolini prepared Italy for war.

Alfa Romeos fortunes during the Second World War slipped even further. In 1936 a Spanish engineer by the name of Wil-fredo Ricart was hired to replace Jano as head of the design office at Alfa Romeo. Ricart had extensive experience designing diesel engines and sports and racing cars, and had also organized public transportation in the city of Valencia before arriving in Italy. Expectations of his potential for designing Alfa Romeo cars was very high. But Ricart, it was soon discovered, exhibited some very strange habits, including a penchant for wearing enormously thick rubber-soled shoes. When asked by Enzo Ferrari why he affected these shoes, Ricart replied in all seriousness that a geniuss brain must be cushioned against the harsh unevenness of the ground lest its delicate mechanics be disrupted. Upon hearing Ricarts response, Ferrari left Alfa Romeo. During the war years, Ricarts designs for the company never went beyond the prototype stage.

After the end of World War II, Alfa Romeos factory at Portello needed rebuilding due to the damage inflicted by American and British bombing raids. At the same time, the companys board of directors decided to release Ricart from his contract and hire Orazio Satta to replace him. Satta was the last of the great Alfa Romeo designers. Educated as an aeronautical engineer, Satta guided the company into an era of racing success and economic prosperity. Satta was responsible for designing the 6C 2500 Super Sport, the 1900 Sprint, the Giulietta Sprint Special, and the famous Spider Veloce. All of these cars sold extremely well abroad, with the Spider Veloce selling especially well in both Britain and the United States. During Sattas tenure, Alfa Romeo also continued to be successful in racing, winning such prestigious races as the 1950 and 1951 Swiss Grand Prix and the 1953 Grand Prix of Supercortmaggiore at Merano.

By the early 1960s, the factory at Portello was unable to produce enough cars to suit the growing demand of Alfa Romeo customers, so the company built a new assembly plant at Árese, about ten miles away from Portello. In 1963 the first Giulia Sprint GT rolled out of the plant at Arese, and by 1970 manufacturing capacity had increased to 150,000 automobiles per year. Still striving for the best performance from its vehicles, the company built a test track at Balocco, west of Milan. Numerous prototypes were tested on this track, and Sattas reputation as a designer continued to grow with each successful production. As sales increased, Alfa Romeo laid the foundation for a new plant just outside Naples, the place of Nicola Romeos birth.

In 1970 Alfa Romeo sold 109,598 cars worldwide, primarily in Europe and the United States. The company was at the height of its success, with a growing share of the sports car market in every country where it sold cars. When Satta retired, accolades were heaped upon him, both by his peers and by the Italian government. After Sattas retirement, however, Alfa Romeo began to experience managerial and financial problems. Rising production costs and increased competition from Ferrari, Maserati, Jaguar, Porsche, and American car manufacturers led to declining revenues. In addition, the tradition of testing new Alfa Romeo models through the racing circuit was growing less important to the design office, and technical problems began to occur in cars purchased by customers expecting high levels of performance. By the early 1980s, the manufacturers financial position had deteriorated so rapidly that the state-owned holding company Finmeccanica had taken control of the Alfa Romeo factories.

Under the auspices of Finmeccanica, Alfa Romeos fortunes fared no better. Management was unable to stop the companys financial hemorrhaging and, as a result, Alfa Romeo became an attractive takeover target. Ford Motor Company expressed interest, but in 1986 Fiat outbid Ford, acquiring Alfa Romeo and all its holdings for $1.75 billion. Fiat, a well-established Italian car manufacturer owned by the Agnelli family, regarded Alfa Romeo as the perfect complement to its own line of European sports cars.

Alfa Romeo benefitted from Fiats largesseFiat decided to invest over $1 billion in rehabilitating and improving the companys manufacturing plants in Portello, Naples, and Arese, while more than $1.25 billion was earmarked for research and development. Yet Fiats direct management and supervision of Alfa Romeo car production and distribution was unable to reverse the companys fortunes. In 1989 Fiat formed Alfa Romeo Distributors of North America, a 50-50 joint venture with Chrysler. This arrangement, it was hoped, would enable Alfa Romeo to increase its presence in the American automobile market. Since Alfa Romeo had sold 8,201 cars in 1986 in the United States, it was not an unwarranted prediction that annual sales would increase to 12,000 by 1991. With new designs ready to roll from the companys Italian factories, Chrysler and Fiat were even confident enough to project annual sales figures of $40,000 to $50,000 by 1995. Fiat depended on Chryslers knowledge of the American car market, and gave Chrysler management a free hand in advertising and distributing Alfa Romeo cars.

From the beginning of the collaboration, however, almost nothing went according to plan. The first Alfa Romeo car produced under Fiat ownership, the 164 sedan, was delayed so that Fiat engineers could improve its quality and add a 2.0-liter turbo engine. The delay lasted months longer than expected, and distributors in the United States were left with nothing to sell except the Milano sedan and the old-version of the Spider convertible. Unfortunately, the Alfa Romeo Milano, another design significantly influenced by Fiat engineers, was plagued with mechanical problems and quickly developed a reputation for unreliability. Chrysler, dissatisfied with the results of the joint venture, decided to dissolve the partnership in 1991. Chryslers withdrawal left Fiat to market Alfa Romeo cars alone in the United States, and, as a result, Alfa Romeos presence in the United States began to decline dramatically. During 1991 only 649 Alfa Romeo cars were sold in the United States.

In an attempt to improve Alfa Romeos dwindling market share, Fiat engineers conceived the 155, introducing the car in Europe in 1992. However, the car didnt sell well, which industry analysts attributed to the lackluster exterior and interior design. With earnings decreasing and debt rising for its U.S. operation, Fiat decided not to export the 155 to America. In 1993 Alfa Romeos car production dropped 24 percent to only 109,598 units, most of which were sold in Europe.

With a decision by Fiat management not to sell the new Spider convertible, the Spider coupe, or the newly designed 145 three-door and five-door hatchback in the United States, Alfa Romeos presence in America has virtually disappeared. Unless Fiat can effectively design and market new sports cars in the Alfa Romeo tradition, the company that bears Nicola Romeos name might not survive.

Further Reading

Ciferri, Luca, Fiat Performs CPR to Revive Alfa Romeo, Automotive News, May 16, 1994, p. 26.

Henry, Jim, Fiat Weighs Alfas Fate in U.S., Automotive News, July 5, 1993, p. 4.

Pitt, Barrie, Alfa Romeo, New York: Ballantine Books, Inc., 1971.

Thomas Derdak