THE AUTOEXTREMIST

October 19, 2011

Braggadocio, Bluster and a “Dead Zone” launch custom made for Alfa Romeo.

By Peter M. De Lorenzo

(Posted 10/18, 9:00 a.m.) Detroit. I’ve often wondered what goes through auto executives’ heads when they say some of the things they do to the press. Not that all of them are gifted in that arena or able to discern what should be avoided before they open their mouths, of course, because very few of them actually are. But it can be a painful learning process to say the least, even with a phalanx of PR handlers hovering an arm’s length away, attempting to orchestrate every utterance.

There have been naturals at it over the years. Lee Iacocca was an old-school master at it, combining bluster with an uncanny knack for coming up with a phrase that the press could latch on to. Bob Lutz inherited much of Iacocca’s knack for that, with a dollop of arrogance and a razor-sharp acerbic wit thrown in for good measure. And of course Alan Mulally is naturally brilliant, a gifted communicator who in my experience is simply the best that there’s ever been in this business, and certainly one of the best that corporate America has ever seen.

But communication stars like the aforementioned executives are few and far between, and it’s difficult for merely good executives to approach them, let alone measure up to them, because the bar has been set so high.

Knowing all of that, one thing that doesn’t seem to be in short supply with the modern era of auto executives is bluster. Wild-assed pronouncements blending braggadocio and overly optimistic sales figures seem to have risen to epidemic levels of late.

First up was Toyota’s executives, telling the world that Toyota not only was gunning to unseat GM as the world’s biggest automaker, but that they would do it handily. Abandoning basically everything they believed in and parking their corporate culture of incremental improvement with new levels of quality by the side of the road, Toyota’s maniacal “new wave” executives went after market share in bunches, over-built plants, churned out decidedly mediocre products, and the inevitable result was that it all came unglued in a matter of months.

Next up was VW’s executives, insisting they would be selling 800,000 vehicles in the U.S. market by 2018. Not that the boast was that unusual, especially given the typical German auto executive’s propensity to go big on bluster and arrogance. As a matter of fact it has become quite common to hear them make sweeping generalizations about this market, with little rhyme or reason attached to them other than they feel like making those kinds of statements. Yet if it doesn’t come to fruition it’s like it never happened and there’s never any follow-up explanation. That’s just the German auto executive way.

Drilling down even further into the German auto executive mindset there’s Dieter Zetsche, the amiable German executive who camped out in Auburn Hills for a while before going back to run Daimler. Dieter’s big quest of late is returning Mercedes-Benz to its once lofty perch at the pinnacle of luxury-performance automobiles, and he’s making the typical promises that it’s not a matter of “if” but “when.”

But this is a different time and a different era. Mercedes-Benz lost its way and squandered its legacy by building lesser cars with a glaring spate of quality issues. This allowed more aggressive competitors (aka Audi, BMW and Lexus) to sweep in and pounce on the Mercedes turf leaving the once-proud German brand reeling. And Zetsche isn’t going to fix that, either. He’s worried about returning Mercedes to its glory days when he should be really concerned about defining what Mercedes is going to stand for in the future. There’s a fundamental disconnect there that will remain mired in the typical arrogance that defines all German auto executives, and I predict Mercedes-Benz will languish in a perpetual state of flux because of it.

(And now we see Lexus reeling from a lack of focus and the turmoil back at headquarters in Japan, its “relentless pursuit of perfection” lost in a sea of predictability and blandness, with shoppers wandering away to find what’s new and interesting. The only thing that’s certain for Lexus is they too are trying to capture the magic in a business that has inexorably changed.)

And the latest King of Braggadocio to weigh-in on this business? No less than Sergio Marchionne, a talented iconoclast with a hyper-inflated view of himself, who is occasionally able to back up what he says, with the emphasis on occasionally.

I’ve covered in detail how Marchionne was handed the keys to Chrysler for a song by the Obama administration out of genuine desperation, and he’s now molding the company in his likeness in order to establish a foothold in this country for Fiat, which is rapidly coming unglued in the Italian market. Back when Marchionne was first gifted with the lesser of what was left of the Detroit Three, I predicted he would eventually turn it into a version of Fiat of North America with a global presence, in order to save Fiat from coming undone permanently. And that’s exactly what’s happening.

There’s no doubt whatsoever that Sergio is a very smart guy. He’s also a master manipulator of situational opportunities presented to him, and needless to say he could see that Chrysler was a golden opportunity to save Fiat as a corporate entity, even if he had to couch it in glowing terms as saving an American auto industry icon to appease Washington politicos and the UAW.

And that’s all well and good. As I’ve stated before, much, if not all, of the Chrysler product goodness rolling down America’s streets and byways right now was well down the road in terms of development before Sergio and his crew even got to Auburn Hills and set up their first espresso machine. It’s important to remind everyone of that fact. It’s also important to think of the True Believers who stuck it out at Chrysler who are responsible for bringing those competitive products to fruition as well.

But Marchionne is running into trouble with Fiat. And his plan for Alfa Rome borders on ludicrous. First of all, as I’ve stated previously, Marchionne promised American Fiat dealers that the good times were just around the corner if only they would invest a million or two in his vision. Because that vision featured a bold product plan that would see Fiat showrooms loaded up with hot-selling Fiats and Alfa Romeos and it would all work out spectacularly well.

Only it hasn’t turned-out that way at all.

Yes, the first-on-the-block frenzy has gone well for Fiat dealers, but that is going to end soon. And with dealers sitting on their investments while only having different flavors of the 500 to sell and nothing else, things are going to get grim in a hurry, especially with no new product on the horizon until the last quarter of 2013, at best. That’s two excruciatingly long years from now.

But here is Sergio cranking up the bluster on Alfa Romeo yet again, recently telling Automotive News that: “We are going to target the U.S. market first and work our way back into Europe. We have run market tests on the desirability of the Alfa brand in the U.S. and – notwithstanding our long absence from the market – it’s still one of the best brands in the world, and I think we need to go back and grab it.”

Then Marchionne delivered the exclamation point on the proceedings by insisting that his target of selling 85,000 Alfa Romeos in the U.S. in 2014 was still realistic.

Really? Let’s review, shall we?

If the first Alfa Romeo is unlikely to arrive here before the end of 2013, that would mean that Sergio’s reborn Alfa Romeo would have to be an instant, monster hit right out of the gate, and that is – charitably speaking – highly unlikely, especially given all the development work that would have to transpire between then and now. These products are going to need extensive tweaking for this market just to be acceptable, let alone competitive. And needless to say, given the problems that just happened with the Fiat launch, nothing, and I mean nothing can be taken for granted with the built-in complexities of an Alfa Romeo launch. Mistakes will be made and delays will inevitably happen. Count on it.

But let’s get back to Marchionne’s statement about “market tests” and “desirability” of the Alfa brand. First of all I would love to get my hands on these alleged market tests because I refuse to believe they have any credibility whatsoever. What, did they show a few pictures of unobtainable Alfa concepts to gain a favorable response? Or the 8C Competizione? And they’re basing a billion-dollar launch of a brand on that?

Guess what? I can massage market testing to get the exact results I want, whether they’re ultimately credible or not. It goes on in this business all the time. And given Marchionne & Co.’s recent track record with the launch of the 500, I’m not willing to give them the benefit of the doubt. This smacks of “smoke and mirrors” marketing at its finest.

And desirability of the Alfa brand? Are you kidding me? Anyone who even knows what Alfa Romeo is in this country is of a certain age, and very few of those even care enough to care anymore. What, should we expect to see advertising with Dustin Hoffman in The Graduate as the marketing hook? After the relentlessly dismal launch of the Fiat 500, nothing would surprise me.

I happen to appreciate classic Alfa Romeos but there is no connection between the really great old Alfas and the unremarkable contemporary cars they’re hanging the Alfa emblem on now. And I’ve seen nothing, and I mean nothing they have planned for the future that will change my view either. They’re just glorified commodity products in a sea of commodity products, with little compelling reason to seek them out other than the fabricated Italian mystique that is sure to be hung on them. And in a world of newly competitive offerings from Ford, GM, VW, Hyundai, et al, well, there won’t be enough of a driving difference to be found in an Alfa for it to matter one iota.

What about the new 4C, you ask? Do you really think that will capture the imagination of the consumer public beyond a few enthusiasts? I’ve got news for you. It might just have the market impact of the Lotus Evora. In other words a giant thud with an Italian accent. Good luck with that.

The High-Octane Truth about Sergio & Co. and the launch of Alfa Romeo in this country is that it will be what I like to refer to as a “Dead Zone” launch. That means that any accrued history or legacy of the brand will be virtually nonexistent, so they will be starting from zero.

I will remind you that there’s really nothing good about this scenario, and I will give you an idea of what it will be like.

First of all Marchionne will grossly underestimate what it will take to make an impact in this market in terms of marketing and advertising, as is his wont, so Alfa Romeo will stumble right out of the gate. (In case you’re wondering, a proper “Dead Zone” launch requires an investment of at least $200-$300 million in marketing. Sergio will no doubt scoff at the figure and try to do it on the cheap, and Sergio will watch as his “85,000 Alfas in 2014” prediction goes down in flames too.)

Secondly, there will be launch problems because there are always launch problems. That means that what little Alfa product shows up in 2013 will be late, and if product flow is just a trickle by the spring of 2014, watch out. If the dealers are apoplectic now, what will they be like then?

And finally, much of the overly inflated expectations for Alfa Romeo might have been kept in check if Sergio could only have dialed down the bluster and braggadocio by about two thirds. But he just can’t help himself. He’s the smartest guy in the room (just ask him) by half and he knows what’s best, whether he actually does or not.

But “85,000 Alfas in 2014” is beyond ludicrous. So ludicrous in fact that it’s very likely that Fiat dealers will be looking at their watches in the spring of 2014 wondering where their Alfas are.

And that will be a giant pasta bowl of Not Good.

That’s the High-Octane Truth for this week.

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