MILAN — Fiat Chrysler Automobiles' slumping Maserati business has become a headache for new CEO Mike Manley after the brand's profitability and vehicle sales went into a steep slide. Manley has blamed the luxury unit's problems partly on mistakes that had it managed "almost as if it were a mass-market brand."
Maserati's adjusted earnings before interest and taxes plunged 87 percent to €15 million ($17.2 million) in the third quarter. The brand's global vehicle shipments fell 19 percent to 8,800, while its profit margin dropped to just 2.4 percent from 13.8 percent in the same quarter last year.
The brand's targets are a 14 percent margin for this year and 15 percent in 2022.
FCA's decision to bundle Maserati with its Alfa Romeo marque under a single leader was a mistake, Manley told analysts on the automaker's third-quarter earnings call in October.
"With hindsight, when we put Maserati and Alfa together, it did two things. Firstly, it reduced the focus on Maserati the brand," Manley said. "Secondly, Maserati was treated for a period of time almost as if it were a mass-market brand, which it isn't and shouldn't be treated that way."
Last month, FCA named its chief technology officer, Harald Wester, who previously led the brand from 2008 until 2016, to head Maserati. Wester "has a good understanding of the luxury market and a deep understanding of Maserati as a brand," said Manley.
Executive moves
One of Wester's first moves has been to recruit a seasoned executive in ultraluxury sales and marketing from Ferrari, Jean-Philippe Leloup. He was previously head of Ferrari's business operations in central and eastern Europe and will lead a new organization called Maserati Commercial, Wester said in a statement.
- Vehicle shipments: 8,800, down 19%
- Revenue: $722.9 million, down 23%
- Adjusted EBIT:
- $17.2 million, down 87%
- Profit margin: 2.4%, down from 13.8%
In addition to Leloup's appointment, Wester also announced that longtime Chrysler executive Al Gardner would be the new leader of Maserati in North America.
Maserati also has been hit by the slowdown in the Chinese market and new Worldwide Harmonized Light Vehicles Test Procedure emissions standards in Europe.
Former FCA CEO Sergio Marchionne's 2014-18 business plan for Maserati envisioned full-year vehicle sales of 75,000 in 2018. On June 1, the target was revised downward to 50,000. With vehicle sales down 26 percent to 26,400 in the first nine months, even the lower full-year goal is likely to be missed by a wide margin.
Maserati would have to ship 24,000 cars in the October-December period, one-third more than the record 18,237 shipped in the fourth quarter of 2016.
Bernstein analyst Max Warburton wrote in a note to investors that "Maserati looks broken — a 2.4 percent margin in Q3 is better than Q2. The business — and its volume, pricing and distribution plans — surely need a rethink."
Product famine
Felipe Munoz, an analyst with JATO Dynamics market researchers, said Maserati's main problem is the lack of new products and the lack of a regular cadence of launches.
Maserati's first crossover, the Levante, is now 2 years old and competes in the large premium crossover sector. Its sales are not helped by the fact that midsize rivals such as the Porsche Cayenne, BMW X5 and Mercedes GLE have all been renewed, Munoz said.
Maserati's sponsorship of upmarket activities, such as polo, help to strengthen its premium positioning, he said.
According to FCA's 2014-18 plan, Maserati was supposed to add three models: the Alfieri coupe and convertible, replacing the GranTurismo and GranCabrio, and a sixth specialty model. None of them has been launched.
FCA's 2018-22 plan includes the two Alfieri cars, plus the addition of a midsize SUV and the electrification of the product range.
No specific launch dates have been given.
Without new products, Maserati relies on the Levante and the Ghibli and Quattroporte sedans, with demand faltering for all three.
Manley told analysts that what has been done so far "will be followed by some further action we will take in the fourth quarter.
"It will take at least two quarters to sort through some of the channel issues, but I'm expecting Harald and his team to make some significant progress beginning in the second half of 2019."
Analysts questioned whether the 2022 margin target of 15 percent was achievable.
Manley's response: "I have no reason to believe that Maserati can't achieve that with what I'm seeing today."