Maserati won't see profits until after product offensive starts in 2020

Losses have deepened for troubled Maserati, which will not return to profitability before 2020 after its next product offensive starts, executives at parent Fiat Chrysler Automobiles said. The luxury car brand plans to debut 10 new or revised models between 2020 and 2023.

Maserati posted a 119 million euro ($132 million) loss as it cut production to reduce dealer stocks by 3,000 vehicles and wrote down residual values in the U.S. Those two actions weighed heavily on Maserati during the quarter (see box, below).

Maserati slashed shipments to dealers 46 percent to 4,200 cars in the second quarter while unit sales declined 17 percent to 7,200 vehicles.

FCA Chief Financial Officer Richard Palmer said dealer stocks of Maserati’s aging lineup would be reduced further during the second half of 2019. By year-end, the automaker wants to have enough supply to cover two to two-and-a-half months, down from five months at the end of 2018.

FCA CEO Mike Manley called Maserati's sales volume "disappointing," and said the third and fourth quarters would also be difficult for the brand before things improve next year.

On the bright side, Maserati’s Q2 unit sales decline was an improvement on the 32 percent slide during in the first three months of this year and was the brand’s smallest drop in the last 10 quarters. Margins in North America also improved in the second quarter, Manley added.

Analysts were less impressed with Maserati’s performance. In a note to investors Alliance Bernstein’s Max Warburton said the automaker’s “problems become ever more apparent as the products wither in the market, falling far short of original ambitions.”

Warburton was making a reference to the goal from FCA’s business plan covering 2014-2018, which predicted Maserati’s vehicle sales would rise to 75,000. Instead, they peaked at 48,700 in 2017 before slipping to 35,300 last year. Maserati’s first-half volume of 13,500 vehicles is 25 percent below its volume from the same period last year. In June 2018, Maserati set new targets: annual sales of 100,000 vehicles and a 15 percent operating margin by 2022.

Steven Reitman of Societe Generale said during the call that Maserati’s results show “the unrealistic expectations” of the past. “Given Maserati’s asset base and given the volumes you’re realistically getting from these vehicles when you don’t overstock the dealers, do you think you have to look at impairments to bring asset value more in line with the sales level?” Reitman said to FCA CEO Palmer during the call.

Palmer said Maserati’s sales are extremely sensitive to volumes, adding that “it doesn’t take a lot to improve once we get more engagement from the dealer body and more visibility on some models.”

Maserati will count on a familiar executive and a new arrival to the team to fix the brand’s business.

Former boss Harald Wester returned to Maserati in late 2018. As CEO he will work closely with new chief operating officer Davide Grasso, a marketing expert who Manley recruited from Nike.

Those two will oversee the debut of 10 new or refreshed products between 2020 and 2023.

Maserati’s revised portfolio that will include the launch of a new sports car as well as updates to the Ghibli and Quattroporte sedans and Levante SUV next year.

In 2021, Maserati plans to add an SUV below the Levante, a cabriolet version of the new sports car and the Granturismo coupe’s successor.

The GranCabrio and Quattroporte successors are due in 2022 while the next-generation Levante should launch in 2023.

Maserati’s new and revised models are expected to offer plug-in hybrid variants, FCA said.