11-27-2005, 10:17 AM
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Why did the Italian Government sell Alfa?
I'm interested in knowing the reasons behind why the Italian Government sold Alfa Romeo in the late 1980's. I've tried doing my own research on this topic via the internet but have not come up with too much. Since there are so many Alfa historians here I thought this place could more of a help to me. In particular:
1. What circumstances led up to the Italian Government's decision to denationalize Alfa in the late 1980's?
2. At what price was the Alfa Romeo brand sold to Fiat for?
3. Were there any other companies interested in purchasing Alfa besides Fiat? I heard that Ford and Chrysler both wanted it but were outbid by Fiat. I also heard a rumor that BMW was approached by the Italians but showed no interest in buying the Alfa brand.
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11-27-2005, 11:04 AM
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I think the best answer for question (1) is: It was fashionable.
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11-27-2005, 11:26 AM
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Alfa Romeo approached BMW and indeed BMW showed interest in the R&D and Balocco facilities
but BMW had no need of Alfa's production capacity because the allready captured the sport sedan market and it would take a massive investment.
Ford stepped up as a buyer. But Fiat, which had so many years ago gone on record for Alfa's closure, was unwilling to see a marketing giant such as Ford gain position in its home market.
Fiat's protectionism which has characterized the Italian carmarket.
The arrangement with Fiat was much more politics than business. FIAT actually had to promise
not to dissolve Alfa Romeo as a brand. They have made numerous promises to invest in
Alfa Romeo but few of this promises have been materialised. Lancia and Alfa Romeo would make cars in Arese etc.
One of the first acts after the Fiat takeover was the cancellation of the 75.......
I believe FIAT didn't have to pay for Alfa Romeo because Alfa Romeo had a lot of debts
and FIAT needed to invest in the facilities but it people never suspected it actually would
go to FIAT. Even the unions were heaviliy against FIAT and knew what Fiat had done with Lancia.
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11-27-2005, 11:55 AM
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 Quote:
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Originally Posted by Aghevli
1. What circumstances led up to the Italian Government's decision to denationalize Alfa in the late 1980's?
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And the politician at the end got his factory, albeit 10 years later: it was the ARNA plant in Pratola Serra, provincia di Avellino.
After 15 years of losses, and the fashion quoted by fudje, no one except trade unions opposed to the sale. It was carried out, BTW, by former UE commision president Romano Prodi.
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2. At what price was the Alfa Romeo brand sold to Fiat for?
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One could say "nothing". The concorded price was to be paid in 5 terms, starting 5 years after the effective purchase. That alone means an actualization of the value at 20% of the concorded price - if they ever paid. Some doubt they did. Fact is that the main point of the agreement was a series of promises on maintaining the technical strenght and culture of Alfa, and enhancing it. Well before they paid the first lira, they had disregarded all the agreements. Others were about renewing the tooling, increasing the production to 300 000 cars, and maintainig the workforce level.
5000 billion liras had to be invested to modernize Alfa and raise the production capacity, together with a lot of new models.
The agreed price was 1050 billion liras, first payment due January 2nd, 1993.
The Arese plant, now closed except for some test departments and administrative offices should have been extended and dedicated to the high-end ranges of Alfa and Lancia.
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3. Were there any other companies interested in purchasing Alfa besides Fiat? I heard that Ford and Chrysler both wanted it but were outbid by Fiat. I also heard a rumor that BMW was approached by the Italians but showed no interest in buying the Alfa brand.
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Ford was the closest to final agreement, then Fiat, who had declared herself "not interested" suddenly started an opinion campaign scandalized that Alfa would end in foreign hands. And they got it.
Good site in Italian on the topic:Valter Molinaro's
Books:
Il mito Alfa by M. Vitale, Edizioni Egea, 2004
Luraghi, l'uomo che invento' la Giulietta by R. Gianola, Ed. Baldini, 2000
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11-28-2005, 03:12 PM
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Originally Posted by gtv2000
Ford was the closest to final agreement, then Fiat, who had declared herself "not interested" suddenly started an opinion campaign scandalized that Alfa would end in foreign hands. And they got it.
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11-28-2005, 04:04 PM
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GTV200 pretty much covered the entire chain of events. Alfa was more or less a profitable company until they were forced for political reasons to open a plant in the south of Italy which eventually made the AlfaSud. While the Sud was not a bad car, it was a financial disaster for the company and drove the firm into a never ending series of losses. Due to political pressure, they could never cut employees.
What was cut was quality control. Socialist polititians insisted that Alfa used poor quality Soviet steel in the Alfetta which lead to premature rust. The V-6 was originally supposed to be introduced in 74 in the Alfetta, but was postponed to 79 because of budget pressures. In the early 1970's, Alfa was at the top of thier game, similar to the position that BMW was in several years ago. The politicos drove it into the ground.
As for Fiat, they initially had no intention of buying Alfa becuase they realized the terrible financial shape the firm was in. Only when Ford with thier deep pockets showed interest did they politically outmanouver the Americans and pick up the firm. They essentially paid nothing for Alfa, only promising to keep employment at a certain level a number of years, a promise that Ford would not make (Ford and anyone else would have shuttered the Alfasud plant immediately). Since then, they have mismanaged Alfa as badly as the parent company.
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11-28-2005, 08:26 PM
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Originally Posted by Aghevli
Doesn't Chrysler fit into this story somewhere? I heard there was an agreement for Alfa Romeos to be sold through Chrysler dealerships before they left North America. As far as I know nothing ever materialized but I do remember hearing that Chrysler wanted Alfa at one point.
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Bob Farace
1971 Alfa Romeo 1750 Spider Veloce
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11-28-2005, 09:09 PM
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Originally Posted by Zinhead
GTV200 pretty much covered the entire chain of events...
As for Fiat, they initially had no intention of buying Alfa becuase they realized the terrible financial shape the firm was in. Only when Ford with thier deep pockets showed interest did they politically outmanouver the Americans and pick up the firm...
Since then, they have mismanaged Alfa as badly as the parent company.
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Mike Gilbert
1967 1600 Spider
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11-29-2005, 06:36 AM
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Quote:
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Originally Posted by Zinhead
GTV200 pretty much covered the entire chain of events.
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Alfa was more or less a profitable company until they were forced for political reasons to open a plant in the south of Italy which eventually made the AlfaSud.
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Nope, I was not referring to Alfasud. While it's true that Alfasud ended in a financial disaster, it was because of quality problems linked to the improper training and discipline of the workers, as well as both influence of mafia and terrorist Red Brigades inside the factory. The market trend also changed radically, but actually, during the 70s, it was the Pomigliano plant that didn't manage to fulfil the demand for Alfasuds.
What I was referring to is the eventual ARNA plant in Pratola Serra, that was first planned as a factory where part of the Arese production would have been delocated. Luraghi was the promoter of the Alfasud project, but opposed to the Pratola one up to being dismissed.
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What was cut was quality control. Socialist polititians insisted that Alfa used poor quality Soviet steel in the Alfetta which lead to premature rust.
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A b*llsh*t I've heard I-don't-know-how-many-times, sorry, an urban legend. I have been interviewing involved people who all denied the story of Soviet steel. But quality control was a serious concern, yes.
BTW, when I referred to politicians, I had in mind a well-known Christian-Democrat one of those times whom Italian readers should recognize. It was all about favouring his own county, not a question of ideology of any kind.
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The V-6 was originally supposed to be introduced in 74 in the Alfetta, but was postponed to 79 because of budget pressures.
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A market/political opportunity. It was difficult to present a new, upmarket car when petrol costs were rocket-rising and fuel economy was on everyones lips. Of course, presenting in 1979 a 5 years old car wasn't very wise either...
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In the early 1970's, Alfa was at the top of thier game, similar to the position that BMW was in several years ago. The politicos drove it into the ground.
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It's a very complex story, and I have the project to write down a comprehensive article on that, but I don't feel prepared enough yet, as I have some more people to interview before I can have an overall sight. But the books I have quoted above are already interesting attempts.
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11-29-2005, 12:43 PM
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I think there is more to it.
Luraghi has got all the glory regarding to Giulietta, but his initial intention was to produce a car of 750ccm, hence the type number. The Agnelis, with there political relations, prevented that Alfa Romeo going into this size of engine, in an market segment, witch originally was the Fiat territories.
The Italian has a strange tax system that favours the small engines, and penalises the larger ones. I think that was the reason for Luraghi to persuade the idea of a small car , under 1000ccmor or smaller, as he saw the potential growth in smaller engine marked, was where the potential growth for Alfa Romeo was. In the end of 50 he made a new tray with the Tipo 103 front wheel drive. He had to settle for a corporation with Renault to build the Dauphine, Ondine and R4 , that Alfa Romeo assembled for the Italian market for Renault.
] In the beginning of the 60 there was a political wish for developing of the southern Italian. Luraghi did a very splendid job by positioning Alfa Romeo as a responsible player in the wishes of the technological development of southern Italian.
Louraghi succeed in getting support for a Alfa Romeo assembly factory , but only a assembly factory, in the old Alfa Romeos Aeroplane area Pomigliano dÁrco . Afterwards he managed to outmanoeuvre the politicians that supported the Agneli´s, so he finally got his desire wish to produce a small Alfa Romeo the Alfa Sud.
Despite all the qualities the Alfa Sud had ,Alfa Romeo was never able to earn money on them , some say that every car produced cost the Italian tax payer in the area of 2000 USD.
I think the mistake was done before the implementing of the Alfa Sud.
I am of the opinion, that the marketing management had not seen what Alfa Romeo has accomplish with the Giulia series.
It started with the 1900-Giulietta, and was confirmed by Giulia. There was created a new market segment, and I think that they overlooked this fact, and that Alfa Romeo´s future was to move up in the segment, they had tried in the past, but the development on the European marked , despite oil crises, with higher income has supported the upper end of the market where Giulia was placed.
At the time Alfa sud was presented, Alfa Romeo was a company that has its future growth potential marketet outside Italian , and now they had produced a car that first and foremost was aimed at the Italian market, of taxation reasons.
Luraghi finally was able to beat the Agnellis,but it was to late.
Luraghi had finally got his desires fulfilled , and it finally forced him to retire. It is not the first time in history , and certainly not the last, a management has there desires from the past ,and want to use them for the future.
After the Alfa sud was implemented, BMW , who had presented its 1600 model in 1964, slowly took over that market segment that was created by Alfa Romeo, and Alfa Romeo did not have Management power to handle the new market situation with presentation in different segment, maybe the Image on the products at beginning was the same , but the image of the Alfa sud was soon to be adopted to every Alfa,and that didn't do the job easier. And by beginning of the 80 there was no money left to develop new chassis to replace the Alfetta.
Another thing that inflated the sale of Alfa Romeo, was the European community, where the open market was implemented in the beginning of the 80. That meant that tax borders had to disappear , and the Italian government could not protect Italian produced cars with import tax,as it had done op till this time.And an agreement within the European community that Government supported production, States owned factories, should be reduced and finally forbidden.
So by the reason of Political agreement within the European community , that Italian state had to with drew from car production. At the first these ides was announced , the factory . Alfa Romeo was offered to BMW. But whey should they by a company that already had handed the market over to them for free.
I world expect these European decision, the political process started in the mid/late 70; had a significant impact on the government will to release funds/ loan to support the necessary development needs by Alfa Romeo.
One could also say , that the taxation on cars in Italy,had not supported the sales segment in witch Alfa Romeo was positioned,and Alfa Romeo came under extreme pressure from imported cars, when the import tax disappeared. The prises on BMW and Audi for the Italian market was said to be the lowest in Europe.
So all in all, it was the politicians that didn't se what was coming up, or if they saw it, they didn't have a desire to do anything to it.
So whether there was any value in Alfa Romeo when Fiat took over ,the Agnellis got the victory at last.
There is a book about Luraghi, it in Italian for those that is able to read Italian, unfortunately I am not
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11-29-2005, 01:00 PM
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This is an interesting thread - I'm glad to read it in view of the current situation at Alfa/Fiat and some of the discontent about the new range of cars.
I wonder though - if Alfa builds the 8C and the GTA is actually lighter then does this indicate a gradual shift in priorities at Fiat.
Maybe Fiats growing alliance with Tata will allow Fiat to be Fiat and Alfa be more like it used to be.
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11-29-2005, 01:04 PM
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Here is some additional information Patrick told me where to find.
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11-30-2005, 05:47 AM
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Originally Posted by 2000 touring sp
I think there is more to it.
Luraghi has got all the glory regarding to Giulietta, but his initial intention was to produce a car of 750ccm, hence the type number. The Agnelis, with there political relations, prevented that Alfa Romeo going into this size of engine, in an market segment, witch originally was the Fiat territories.
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BTW, it was Busso's personal idea to propose FWD for a small car, and the idea resumed when the Tipo 103 was on the drawing board. Indeed Fiat interference also played a role.
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In the beginning of the 60 there was a political wish for developing of the southern Italian. Luraghi did a very splendid job by positioning Alfa Romeo as a responsible player in the wishes of the technological development of southern Italian.
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Internal immigration of workforce from the South to the large industrial cities in the North caused social, infrastructure, housing, etc. problems, and Luraghi developed the Alfasud project as the Government proposed benefits for industries that would install in the south. At the time, Fiat strongly opposed to that, and went saying it didn't make any sense. The Alfasud operation started 1967 with production planned for 1971 and, strangely enough, Fiat came with its own plan for a southern factory as early as 1969...
The Alfasud project was sized after the previsions of the growth of Italian automobile market, whose average capacity was very low then but expected to raise. The 1200cc of the Alfasud was fitted to what was expected to be the average in the mid-70s.
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At the time Alfa sud was presented, Alfa Romeo was a company that has its future growth potential marketet outside Italian , and now they had produced a car that first and foremost was aimed at the Italian market, of taxation reasons.
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The main thesis of Il mito Alfa is that it was a strategic marketing error to focus on national market rather than developing foreign sales of higher-positioned cars, as did BMW. It's a possible explanation, but at my eyes not the only one.
I fail to see your point about the European Union. While your analysis makes sense for the policies on the 90s, I have no recollection that during the 80s, while still state owned, there were any problems about refinancing Alfa other than Italian Government's self limitations. But if you have traces of that, I would be interested.
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There is a book about Luraghi, it in Italian for those that is able to read Italian, unfortunately I am not
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The one I quoted in a post above, and I read it.
Giuseppe Busso's book of memories is another important contribution: G. Busso, Nel cuore dell'Alfa, 2005
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