Alfa Romeo a tough call for Fiat

Sergio Marchionne does not walk on water. Nevertheless, it may require a miracle to pull off the Fiat chief's latest gambit.

Take his sporty Alfa Romeo brand global with more expensive models and triple its sales volume by 2016 — after years of losses.

To add extra spice to the challenge, which takes place as European car sales plummet to 17-year-lows, the new Alfas will be built in Italy, where labour and material costs are far higher than in the US, Asia or Eastern Europe.

The plan is, however, more than the Alfa brand. It represents Fiat's only real hope of combating a collapse in its home market and breathing new life into idled factories.

Should it fail, and the new cars flop, the company that Italians view as a cornerstone of their economy will have little choice but to put thousands of employees out of work and tip entire communities into turmoil.

The outgoing 60-year old Marchionne has been widely hailed for his 2009 acquisition and subsequent turnaround of bankrupt US automaker Chrysler.

However, his announcement late last year of a strategic overhaul of the 103-year-old Alfa Romeo brand — which Fiat acquired in 1986 and has since failed to revive despite repeated attempts — has been greeted with skepticism.

"I wouldn't write the plan off," said Bernstein analyst Max Warburton, noting the brand's resilience despite years of neglect.

"But get it wrong, or find consumers aren't interested, and it will be a financial catastrophe."