Fiat's takeover of Alfa Romeo in 1986 was a culture clash of the first magnitude. Imagine Toyota acquiring Nissan? General Motors buying Ford? Daimler scooping up BMW? Here were two great rivals in their home market, Alfa assuredly the minor player but very proud of its history and the prestige of its brand—perhaps too proud.

The two Italian companies had coexisted quasi-amicably until 1972, when Alfa Romeo aimed an Exocet into Fiat territory with its cheeky Alfasud small car, made in a former aircraft-engine factory near Naples that was rebuilt with taxpayers’ money by government-owned Alfa. Here, thought Fiat—not without reason—was unfair competition on its home ground. Though bedeviled by strikes and absenteeism, the Naples plant produced an attractive car conceived by Austrian Rudolf Hruska that was a lively domestic alternative to Fiats and an export success until rust ruined its reputation.

Fiat has struggled to manage its Alfa acquisition. After the takeover, it created a new company called Alfa-Lancia, forcibly marrying the Milan company to its longtime Turin rival, which Fiat had rescued from the breaker’s yard in October 1969. There is no love lost between the cities of Turin and Milan; each has contempt for the other. And in naming the joint company Alfa-Lancia, the proud Alfa Romeo name was mortifyingly truncated (much like the erasure of Benz from DaimlerChrysler). When I broached this topic with senior Fiat people, they feigned mystification. They were the conquerors; they could do as they liked.

Fiat Auto’s dynamic managing director, Vittorio Ghidella, was named chairman of Alfa-Lancia. In an interview, he was scathing about Fiat’s new acquisition, briefing a reporter that it was “in serious trouble because of the strategic error of having attempted to enter the small-car market with its humble Alfasud,” which “went against the image of power associated with Alfas for more than half a century. Alfa always sold well because of its exceptional performance and aggressive line until mistakes were made in recent years.” Ghidella tried to engineer some cost-saving commonality between Alfa Romeo and Lancia, but only two years later he was out of the Fiat Group after a bitter internal clash over its allocation of resources.

Missing the jet thrust of Ghidella, Alfa Romeo declined into the doldrums. Just short of 200,000 in Fiat’s first year, 1987, production initially rose to 220,000-230,000 through 1990. Then it collapsed to half that level in 1993, 1994, and 1996. New models based on Fiat platforms arrived, but with excruciating slowness. Only with the launch of the gorgeous 156 in 1997 did Alfa sales start to recover, with more than 200,000 made from 1999 through 2001. In 2002, however, output declined to 187,437 units. Production in 2006 fell to 157,775, and in 2007 was some 6000 fewer still.

Most mortifying of all has been the negligible market success of Alfa Romeo’s prestige flagship, the 166. Its predecessor, the Enrico Fumia-styled 164, made a valiant effort to establish a place for Alfa in the executive-car market, selling a quarter million over seven years, a decent annual average of 35,000. In contrast, the 166 has muddled along at annual volumes of 8000 that Autocar called “pathetic.”

I discussed this and the parallel problems of Lancia with a Roman friend who is knowledgeable in the field of auto design. “I think the reason that the Italians don’t do well with luxury cars is that they lack the necessary culture,” he said. Italy has a flourishing culture in small cars and sports cars, segments in which it is among the world’s best. But luxury cars? Italians just don’t believe in them. They are heavily dutiable and an all-too-visible sign of wealth that attracts the tax man. Italy’s finest post-war effort in the luxury-car field, Lancia’s Flaminia, struggled vainly against these handicaps. Italy should be able to make outstanding executive cars, but her designers and engineers lack a heartfelt commitment to this class of car. That they don’t like the Berlusconi-class people who drive them is all too obvious.

Another handicap for Alfa Romeo is the brand’s insularity. All but a handful of its cars are sold in Europe; the rest of the world doesn’t exist. Even at that, the picture in Europe is not reassuring; Alfa Romeo’s European share is less than 1 percent. A key market, Germany, has seen a steady decline from 2001’s 25,700 units to 19,000 in 2002, 15,000 in 2003, and less than 12,000 in 2007. Although 89 percent of German Alfa owners say, “I like my brand,” that figure is down from the previous 93 percent. Even more worrying is a drop from 24 percent to only 18 percent of Germany’s car enthusiasts who say of Alfa Romeo, “I like the brand.”

The story of Alfa Romeo in North America is no prettier. A friend of mine was an Alfa dealer in Cleveland; in the 1960s he went two years without new cars, and Milan didn’t seem to think that was anything out of the ordinary. Alfa relied on the fact that it had a core of dealers in America who were so dedicated to the brand that they would put up with anything, including indifferent quality and elusive parts supplies. Those days are long gone, of course, now that dealers have been badly spoiled by the Japanese. And the attitude of Alfa’s men in America didn’t help. “What’s the matter with these Americans?” one grumbled to me in frustration. “Don’t they know this is an Alfa Romeo?”

I breathed a sigh of relief when I heard that the original plan to return Alfa Romeo to America in 2003 was postponed. In the wake of Fiat’s “strategic alliance” with General Motors in 2000, the first signs were that Alfa would be back in jig time but with a minimal model range, a surefire recipe for disaster. It was thought then that Alfas would piggyback on the GM dealer network, a concept that brought back memories of the ill-fated partnership between Chrysler and Alfa Romeo in the late 1980s. This was a vestige of the failed talks between Chrysler and Fiat Auto that had hoped to achieve an alliance. Against goals of selling up to 30,000 cars a year, the effort struggled to move 8000. Alfa carried on alone and sold 414 cars in its final year in the States, 1995.

Next, the plan was to return to America in 2007 with a full line of the new cars that were launched in Europe in 2005 and 2006, the 159, Brera, Spider, and GT. The goal then was said to be annual sales in the 50,000-60,000 bracket, which sounded awfully high. Nor was the idea of selling Alfas through Cadillac, Saab, and Saturn dealers convincing. Saab outlets might have a fighting chance, but otherwise these aren’t dealerships that would attract people who would consider an Alfa Romeo. Its dealers should be stand-alone outlets backed by people who understand the sports-car market. They’re out there, but whether they want to sign on for another roller-coaster ride with Alfa Romeo remains to be seen.

Since the bad old days of Alfa-Lancia, Fiat has made some effort to rediscover the brand’s soul. Alfa Romeo is a separate business unit with some autonomy. But its top executive’s chair has been something of an ejection seat. First to take it in 2002 was manufacturing engineer Daniele Bandiera. He was followed by Antonio Baravalle, who left Fiat in 2007. Instead of a direct replacement, his seat was filled by Fiat wonder boy Luca De Meo, who is also in charge of all the Fiat Group’s marketing activities. De Meo jumped to prominence after joining Fiat in 2002 to head Lancia’s marketing efforts.

Luca De Meo is one of the new crew recruited and promoted by Fiat CEO Sergio Marchionne. Joining Fiat’s board in 2003, barrister and accountant Marchionne was appointed its CEO on the first of June, 2004. With neither fear nor favor, he swept out most of the old guard and appointed new young talents to key positions, among them De Meo. The bad news is that this meant the departure of many long-serving experts. The good news is that this meant the departure of many long-serving experts, among them the dyed-in-the-wool Alfa Romeo people who, like my friend above, just couldn’t understand why people weren’t buying Alfas.

Now the expectation is that Alfas will return to America in late 2009 as 2010 models, just in time to celebrate the centennial of the company, which traces its origins to 1910. Much is being made of the role of the exciting 8C Competizione and its Spider sister as harbingers of the range. More important will be the merit of the affordable models in the lineup. Here there is reason for concern. They are based on the “premium Epsilon” architecture developed during the GM-Fiat alliance, a platform that GM itself abandoned in 2003 for reasons of weight, according to GM product czar Bob Lutz.

The effect of this is all too evident. Comparing the Brera with its rivals, WINDING ROAD found a “glaring difference in dynamics” owed to “the Brera’s weight. We drove all four cars at their true fighting weights onto a public scale, and the Brera 3.2 Q4 at 3990 pounds weighs nearly 730 pounds more than its nearest competitor, the TT 3.2 Quattro at 3263 pounds!…Even though we knew the Italian was heavier ahead of time, this mondo weight difference was a shock, and it explains almost everything about how we felt toward the Brera.” Nor were the car’s other attributes up to snuff.

That’s why it’s good news that new people are on the Alfa Romeo case. They will be less dependent on the fading glories of the brand and more likely to be aware of the product shortcomings that urgently need attention. One man who will be dealing with that is forty-year-old Christopher Reitz, the Austrian who took over the Alfa Romeo styling studios at Arese in April of 2008 after the sudden departure of short-termer Frank Stephenson. The latter’s predecessor Wolfgang Egger did the 8C Competizione and the new MiTo small car.

In Alfa’s racing heyday, the emblem of Alfa Corse, the company’s in-house racing team, was a four-leaf clover. This brought Alfa Romeo a lot of luck, including the first two Formula 1 World Championships of 1950 and 1951. Alfa will need a lot more luck when it tries to take another bite of the American apple. Let’s hope it finds the right management, the right timing, the right dealers, and the right cars, because a little affordable Italian sporty luxury could go a long way in the New World.

Magazine Issue: Winding Road Issue 1