Maserati profit slide, lack of new products is a headache for Fiat Chrysler CEO Manley

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Maserati needs new products, such as the Alfieri that was unveiled as a concept during the Geneva auto show in 2014.

MILAN – The shrinking Maserati company of Fiat Chrysler Automobiles is a headache for the new CEO Mike Manley after the profitability of the brand and the sale of vehicles went down a steep journey. Manley attributed the luxury department's problems partly to errors that they managed "almost as if it were a mass market brand".

Maserati's results fell by 87 percent to 15 million euros in the third quarter. Global brand shipments declined by 19 percent to 8,800, while the profit margin fell to just 2.4 percent from 13.8 percent in the same quarter last year. The brand's goals are 14 percent margin this year and 15 percent in 2022.

FCA's decision to bundle Maserati with its Alfa Romeo brand under a single leader was a mistake, Manley told analysts about the third-quarter profit of the automaker on 30 October. "In retrospect, when we put Maserati and Alfa together, it did two things: first, it reduced the focus on Maserati's brand. Secondly, Maserati was treated for a while as if it were a brand of the mass market, which it is not and should not be treated, "said Manley.

FCA named its chief technology officer Harald Wester last month, who led the brand from 2008 to 2016, to lead Maserati. Wester "has a good understanding of the luxury market and a deep understanding of Maserati as a brand," Manley said.

One of Wester's first moves was to recruit a seasoned manager in ultra-luxury sales and marketing of Ferrari, Jean-Philippe Leloup. He was previously head of Ferrari's operations in Central and Eastern Europe and will lead a new organization called Maserati Commercial, Wester said in a press release on Monday.

Maserati has also been hit by the recent slowdown in the Chinese market and the new WLTP emission standards in Europe hit the mark.

Former CEO of FCA Sergio Marchionne's business plan 2014-18 for Maserati foresaw the sale of vehicles of 75,000 units in 2018 for the whole year. On 1 June, the target was adjusted downwards to 50,000. With vehicle sales down 26 percent to 26,400 in the first nine months, even the lower full year target is likely to be missed by a large margin. Maserati would have to ship 24,000 cars in the period October-December, a third more than the record 18,237 that was shipped in the fourth quarter of 2016.

Max Warburton, an analyst at Bernstein, wrote in a note to investors that "Maserati looks broken – a margin of 2.4 percent in Q3 is better than Q2. The company – and the volume, the price and distribution plans – should definitely being watched."

Product famine

Felipe Munoz, an analyst at JATO Dynamics market researchers, said that Maserati's biggest problem is the lack of new products and the lack of a normal cadence of launches.

Maserati's first SUV, the Levante, is now two years old and competes in the big premium SUV sector, the only SUV segment that does not grow, he said. Sales are not helped by the fact that rivals such as the Porsche Cayenne, BMW X5 and Mercedes GLE have all been renewed, Munoz said.

The Maserati Ghibli, left and Levante are pictured at the 2017 Snow Polo World Cup St. Moritz.

Maserati's sponsorship of high-value activities, such as Polo's sport, helps to strengthen its premium position, he said.

According to FCA's 2014-2018 plan, Maserati had to add three models to the current line-up: the Alfieri coupé and convertible, replacing the GranTurismo and GranCabrio, and a sixth special model. None of them has been launched. The latest 2018-22 plan from FCA includes the two Alfieri cars, plus the addition of a mid-sized SUV and the electrification of the range. No specific launch dates are listed.

Without new products, Maserati relies on the Levante and Ghibli and Quattroporte sedans, with the demand faltering for all three.

Manley told analysts that what has been done so far "will be followed by a number of further actions that we will take in the fourth quarter. It will take at least two quarters to solve some channel problems, but I expect Harald and his team to make significant progress from the second half of 2019. "

Analysts wondered if the margin target for 2022 of 15 percent for Maserati is feasible. "I have no reason to believe that Maserati can not achieve that with what I see today," Manley said.