Back in 1989, Chrysler Tried to Help Alfa Romeo Succeed in the U.S.

Rome is not an especially rainy place. So when the cloudy skies opened up with a relatively unusual downpour on March 8, 1989, tourists fled the city’s scenic piazzas for sanctuary in sites like the Pantheon, where the oculus lets the rain come streaming in.

American executives from the Chrysler Corporation and their Italian counterparts from the Fiat Group likely heard more than a little pitter-patter from the raindrops as they sat in a meeting room to ink a 50-50 joint partnership that had been in the works for about six months.

Yes, that’s right: Chrysler and Fiat teamed up in 1989, more than a quarter-century before their enormous merger that became Fiat Chrysler Automobiles.

But in 1989, their relationship wasn’t formed to strengthen both companies. It was to save Alfa Romeo in North America.

It was a gallant trans-Atlantic effort that ultimately did not succeed.

Here’s the story of Chrysler Europa—the joint venture that distributed Alfa Romeo cars through Chrysler dealers in the United States in the 1990s.

Some, But Not Much, Light at the End of Alfa Romeo’s Tunnel

The Italian brand had three major problems: a tiny lineup, a poor reputation for quality, and a weak dealership network. Work was underway in Italy to address the first two issues, but the third required some outside-the-box thinking. 

Alfa Romeo had two cars in its U.S.-market lineup for 1989: a quirky but highly advanced compact sedan called the Milano, and an evocative two-seat roadster called the Spider that still traded on the fact that Dustin Hoffman drove one in “The Graduate.” In 1967, that is.

A big Happy Birthday to Dustin Hoffman, legendary actor and filmmaker, born #OnThisDay in 1937.

📷 Remembering that iconic Alfa Romeo Spider from #TheGraduate. #AlfaRomeo pic.twitter.com/5NGaBEyQhZ

— Stars and Cars (@Superstar_Cars) August 8, 2024

Alfa’s two cars comprised around 5,000 sales annually in the U.S. BMW, with a full lineup of compact, mid-size, and full-size models, sold roughly 15 times as many cars here. But things were starting to look up for the 1990s.

Just a few years earlier, the Fiat Group—which admittedly had troubles of its own—had finally acquired Alfa Romeo. Milan-based Alfa was something of an Italian jewel, particularly in the pre-war years when its race cars brought tremendous prestige to Italy. In the years following World War II, Alfa Romeo was recast as a mainstream brand, albeit one with an especially stylish lineup. Its Giulietta and later Giulia models were the epitome of the postwar “Italian economic miracle” with their gorgeous styling, numerous configurations, and exotic twin-cam four-cylinder power.

Efforts to modernize the Alfa Romeo lineup in the 1970s and 1980s proved more challenging. Between mismanagement issues and horrendous quality gaffes—including a questionable deal made with the Soviet Union that provided Italy with poor-quality steel—the Alfa Romeo that was poised to enter the 1990s lacked the momentum it had a generation prior.

However, Alfa was finally ready to unleash its larger 164 sedan for 1990, which was developed in a weird partnership with Saab. The new, front-wheel-drive car was bigger and far more refined than the Milano that it would replace. To go along with it, the venerable ‘91 Spider gained tweaked exterior styling with far better-integrated bumpers and even a driver-side airbag. The new lineup wasn’t perfect, but it was something for Alfa Romeo to get excited about.

Chrysler Was No Stranger to Italy

The Italian car industry went through a curious consolidation mode in the 1980s. Big Fiat, which also owned Lancia, absorbed Alfa Romeo in the middle of the decade, and it soon upped its share in Ferrari to an impenetrable 90 percent by 1988. Maserati, too, fell partially under the Fiat umbrella.

Even though it sold very few of its own vehicles in Italy, Chrysler was far more entrenched in the country’s car market than any other outside automaker. While he was born in Allentown, Pennsylvania, Chrysler chief Lee Iaccoca was raised in a thoroughly Italian-American household. Perhaps it was his heritage that helped influence some of Chrysler’s decisions.

For one, the automaker’s unusual Chrysler TC by Maserati arrived in the late 1980s as an Italian-built, luxed-up version of the Chrysler LeBaron. While not entirely convincing as a high-end model, it nonetheless helped open the door to Italy.

And Chrysler was fresh off its bargain $25-million purchase of Lamborghini, which was headquartered in Sant’Agata Bolognese, a relatively short train ride (and a very short Countach drive) away from Alfa Romeo in Milan or Fiat in Turin. While the Chrysler-Lamborghini tie-up didn’t have much impact on the American company’s Dodge Caravans and Plymouth Lasers, the Italians helped Chrysler figure out an aluminum block for the Dodge Viper’s V-10.

Moreover, Chrysler and Fiat had a connection. Chrysler tapped a Fiat subsidiary to cast cylinder heads for a 2.2-liter four-cylinder “Trenton” engine used in various K-Car models. Certainly, some Chrysler execs must have taken Italian language courses by the time they sat down with Fiat executives to discuss Alfa Romeo on that rainy Rome day in 1989.

Chrysler Commits to Helping Alfa Romeo

In October 1988, Chrysler and Fiat announced plans to form a company that would jointly distribute Alfa Romeo vehicles and parts in North America. Previously, Alfa Romeo handled that gargantuan task on its own, though it’s worth noting that legendary vehicle importer Max Hoffman spearheaded the brand’s re-entry to the U.S. market in the 1950s.

Setting up a distribution channel is no easy task. An automaker must obtain favorable terms beginning with the shipping companies that first bring cars to U.S. ports and culminating in the franchised dealerships that serve as the primary point of contact with customers before, during, and after the sales process. The bigger the brand, the more leverage it has.

Import-brand car dealerships in the 1950s and 1960s were rarely elaborate affairs. In big markets, some had their own showrooms, but import brands were generally marketed like curiosities in a small outpost of, say, a Ford or Pontiac showroom. That all changed in the late 1970s as demand for fuel-efficient imports soared, and by the 1980s, every major brand had relatively strict guidelines for how showrooms were supposed to look and feel. Alfa Romeo had guidelines, to be sure, but with nationwide sales of just 5,000 vehicles, its dealers understandably saw little rationale to commit to brand-adhering layouts and signage. In fact, more than a third of Alfa Romeo dealers told J.D. Power in the late ‘80s that they were dissatisfied with the automaker’s cars.

The Chrysler-Fiat joint venture came to fruition in March 1989, at which time the 70 or so Chrysler dealers said to have signed up to distribute Alfa Romeos were branded, at least internally, as “Chrysler Europa” showrooms. Though Chrysler would become Alfa Romeo’s distributor, that didn’t mean dealers had to sell Dodges and Plymouths. Existing Alfa Romeo dealers could keep selling cars.

Chrysler shuffled some longtime executives to lead the partnership, and it soon opened up an office in Orlando, of all places, under the name Alfa Romeo Distributors of North America.

The results of the partnership were mostly invisible to consumers, though Chrysler committed to training dealership service departments on Alfa Romeo vehicles. Additionally, Chrysler took a look at the Alfa Romeo 164 and made a few minor tweaks for the U.S. market. The most visible was undoubtedly the North America-specific 1.5-DIN audio head unit with the sound position joystick commonly used in Chrysler products.

Chrysler Didn’t Really Help Alfa Romeo, Or Did It?

The partnership got off to a good start despite the signing day’s weather, but Chrysler needed more than an intuitive audio head unit to help Alfa Romeo succeed here—the answer was a full lineup of high-quality cars. Instead, it got a dated Spider and a trouble-plagued 164. In Italy, the Milano’s eventual replacement, the 156, and the 164’s intended successor, the 166, were designed with the American market in mind, but they were too late.

By 1993, the writing was on the wall. The Spider ended production that year, and in 1994 the Chrysler-Fiat joint venture sold just 565 vehicles here through fewer than 100 dealers. By spring 1995, Alfa Romeo was done in the U.S., though technically the joint venture carried on with a skeleton staff to distribute Alfa parts.

Fiat spent much of the next decade or so dancing in circles with General Motors, but it never seemed to forget its relationship with Chrysler. In 2008, Fiat tossed out the idea of using unused Chrysler assembly lines to build Alfa Romeos, but then Chrysler filed for bankruptcy in 2009. Fiat swooped in, eventually cobbling together shares of the American company to merge the companies as Fiat Chrysler Automobiles, or FCA, in 2014. Maybe some of the automaker’s executives still remembered their Italian.