It’s probable Frank Sinatra’s 1966 standard, ‘That’s Life’ currently plays on repeat at Trident Towers, given Maserati’s latest reversal of fortune. But how bad is it looking for Modena’s second son?
A year ago, we reported on Maserati’s unexpected sales success with an element of scepticism, but for a brief time it appeared as though CEO, Harald Wester’s plans for the Trident were working. With plans for additional new models including the now ubiquitous SUV, volumes in the region of 75,000 per annum by 2017 looked entirely feasible; catapulting Maserati into the luxury car mainstream while creating a buffer for FCA’s loss of Ferrari revenues. But since spring, reports have hinted at slowing demand which a recent Automotive News piece appears to confirm.
According to last week’s report, production at Maserati’s Grugliasco factory will halt for a six week period over the coming two months, putting around 2,000 production workers on extended leave. Maserati’s global 2015 sales are set to fall by around 25%, making the possibility of reaching its 2016 sales target of 50,000 vehicles per annum that much further beyond reach. According to data supplied by IHS Automotive, Maserati sales will level out at around 26,000 by year’s end and operating profit will shrink 87% to €12m; sobering news for Wester and his FCA chief, who have so far remained tight-lipped on the matter.
The recent economic slowdown in China can be cited as one possible reason for the fall in demand, but the US too has to be a significant factor. The Ghibli model spearheaded US sales gains in the region of over 300% in 2014, but as a model, positioned and priced in the region of Mercedes-Benz’s CLS and BMW’s Gran Coupe 6-Series, Maserati is operating in perhaps the most fickle area of the auto market, as anyone with access to car sales data will attest. An observation by the way, backed up by auto analysts. Wester now faces a twin-pronged vista of falling sales, and a growing stockpile of unsold cars which will require incentives to shift – further denting profitability and the trident’s upmarket reputation.
The question now has to be whether Maserati’s bubble has popped? Following last year’s sales records, there was an expectation that while such growth was unsustainable, it wouldn’t tail off so quickly. Wester now has a mountain to climb and worse still, his delayed new SUV will not be contributing much to it before mid-year at least – assuming it does launch at Geneva. Without Levante, Maserati is missing out on a sector all manufacturers now ignore at their peril. Wester told Autocar last month that without a crossover, “you can look forward to a beautiful death.” One glimmer of light however is Europe, of all places. Sales to September 2015 for both Quattroporte and Ghibli are holding up, which has to be preferable to the sharp falls reported elsewhere.
“This is a year of consolidation for us”, Wester told Car magazine recently, “the luxury car market is not doing well”. He suggested Maserati’s sales target of 50,000 vehicles would now occur a year later than planned, before adding the proviso; if the luxury market recovers.
But it doesn’t end there, Marchionne and Wester’s much-publicised plans for reviving Alfa Romeo also appear to be running into trouble. Maserati was intended to be something of a dry run for Alfa and while it’s possible to say lessons learned here can be applied to the Biscione, this etch-a-sketch approach to marque stewardship risks appearing inept. And meanwhile the clock is ticking.
Few executives know better than Harald Wester just how tough the motor business can be; his being perhaps one of the least enviable jobs in the industry. But for all that, as he places ol’ blue eyes back on the turntable, he undoubtedly mutters to himself, ‘it could be worse – I could still be at Volkswagen…’
Quoted sales figures via left-lane.com
Driven To Write 
Given my disenchantment with the current Maserati range, I’m very much inclined to lean back in my chair with a Jack Nicholson-aping grin on my face. But as the ramifications of this reality check actually peril a badge I hold dear, I’m holding back any feelings of Schadenfreude towards the Jumpered One and his sidekicks.
Maybe JLR were not quite so silly when they decided upon the more reserved approach to revive Jaguar’s fortunes after all…
Doesn’t JLR have to cut some billions in costs also? And isn’t that because their sales have fallen 32% in China?
And how reserved is the approach of JLR when we know that they are going to build a completely new factory in this economic climate?
There is never a good time to build a car factory. In a recession when demand is low, cash flow suffers and infrastructure projects are mothballed. Then, when the market booms, the same organisation cannot ride the wave because it doesn’t have the ready capacity. In reality, all new car production is a bit of a gamble. It is arguable that a recession is the best time to invest, as demand for materials and labour are both depressed.
YRFT, I was referring to the brands’ marketing just as much as their manufacturing expansion plans.
By ‘reserved’ I meant the tentative steps, through which the Jaguar brand was first kept in the public’s eye (namely the F-type, which is a stop-gap measure, as well as an image builder, rather than a big money earner), before the product that’s tasked with creating high, yet sustainable growth and profitability was brought to market. All the while, Land Rover’s good sales figures and outstanding yields (only bettered by Porsche’s if industry insiders are to be believed) footed the bills. Jaguar, to sum it, is allowed to take some time before reaching profitability.
In contrast, FCA chose to bring as much product to market in as short a period of time as possible, with the aim being explosive growth. How exactly the purchase and renovation work of Bertone’s former Grugliasco factory were being paid for (not to mention all that r&d work) remains Marchionne’s secret, which makes it appear like much more of a gamble than JLR’s plans, which are hardly risk-free themselves, but do appear to allow for quite a bit more leeway.
The Levante will (probably) be in Detroit, if not there will be a missed opportunity since the USA market is quite important for an SUV. But maybe we should prepare ourselves for a kind of preview (no pics of interior) in Detroit and a complete reveal in Geneva.
Maserati’s brief boom and longer bust are attributable to their product. I wanted to like the Ghibli but in the metal the car is a real eye troubler. Ditto the Quattroporte, to a lesser extent. Both are plays for a contracting mid to upper tier saloon market. The CUV market is a little more forgiving in this respect, but where is the Levante?
The new Maserati saloons (sedans) are certainly nowhere near as pretty as the previous Quattroporte, although the Gandini 4 door was very cool. But they do have frameless doors, which peaked my interest.
Embarrassingly, I’d not noticed the frameless doors on the Ghibli. Especially since I’m very taken with frameless doors – they give a much neater glasshouse.
This is news – Maserati’s not a brand I keep an eye on any more. The latest bunch of cars are too flouncy and fussy and brittle. The current QP is grossly flamboyant. The whole brand stinks of nightclub owners and to think it didn’t in the period 95 to about five years ago.
Trident Towers is pretty accurate because the Maserati HQ in Modena does have an office tower and it does have a Maserati trident logo like a three-pronged spire on top.
I think Maserati have done well so far in growing their range and profile, even if I think the post-Granturismo cars lack styling grace versus the previous QP and GT. (I’m assuming Pininfarina weren’t involved this time around?) I do wonder where all the rich people are to buy these premium cars in such numbers though…
What bugs me is the way FCA keeps making a big noise about ambitious targets then gets caught in a cycle of not meeting them, which makes it easy for the media and financial pundits to find a negative narrative. These are people who can find impending doom in Apple’s world-record quarterly financials so why make it easier for them with vertical growth projections and tight product timelines that can’t be met (or result in underdeveloped products being launched) You can reassure your investors and ‘the market’ without oversharing what your future plans are and harping on about mergers and consolidation.