Earlier this week, we reported on Maserati’s current woes. Today, we continue our analysis and pose a few uncomfortable questions.
In the aftermath of Sergio Marchionne’s untimely death earlier this year, many observers offered a range of views as to the former FCA Chief Executive’s legacy. As is customary in times of personal tragedy, criticisms were muted and delicacies were observed. In his stead has stepped new CEO, Mike Manley, tasked with steering the still-listing FCA vessel through another four-year plan unlikely to be worth the powerpoint programme upon which it was scribed – both then and given the subsequent turn of events, now.
Armed with a hefty fire extinguisher, a hastily re-scribbled plan (subject to further change, no doubt), and a reshuffled team, his task, even for the more successful of FCA’s brand portfolio looks onerous. But for the ill-performing upmarket end of the spectrum, and especially its embattled Maserati business, it’s impossible to describe matters in terms other than grievous.
Because, for all of his déshabillé predecessor’s skill as a negotiator and dealmaker, what can be said without apprehension is that under Marchionne’s rule, a vast amount of money was squandered upon a failed growth strategy; one which in its heedless dash for quick gains, recast il Tridente from its position as perhaps Italy’s Aston Martin to something a good deal less exclusive or desirable.
Before we wring our hands too tightly, we should of course consider the many identities Maserati has enjoyed over the generations, not least the downgrading it endured throughout the 1980s under the guiding hand of Alejandro de Tomaso. It took more than a decade, a tremendous amount of effort and vast sums for Fiat Auto (as was) to successfully remake the marque for the exclusive sub-Ferrari end of the market.
In half that time, but with no less effort and expense, FCA have reset it once more as a more affordable, considerably less exclusive and decidedly less crafted range of products, which by the end of last year were being produced in volumes in the region of 50,000 vehicles. Despite falling below the late Mr. Marchionne’s vastly optimistic projections, this represented something akin to a success in growth terms, even if a shortfall of 25% can hardly be described as mission accomplished.
One is forced however to ponder what FCA truly gained. Jobs were protected, although this is of scant comfort for those Italian production staff now on short-time working. FCA, one could argue, maintained a toehold in the so-called ‘premium’ market dominated by the German prestige marques, at least until the more technically-focused Alfa Romeo revival could be readied to under-perform against expectations. Against these paltry upsides however, it hardly seems to have been worth it.
One of the most justified criticisms of the Marchionne doctrine was the Italo-Canadian’s mystifying lack of consistency and focus. Maserati’s recasting gained FCA a quick win, but it also had the effect of pulling the brand into the no-less storied, but considerably more downmarket Alfa Romeo’s orbit. And while it can be accepted that brand-Maserati currently begins where brand-Alfa ends, the potential overlap is not one that any astute manager would be prepared to accept.
A lack of managerial consistency was also notably at play. Having been Mr. Marchionne’s initial choice for the role of Maserati chief, Harald Wester was shunted aside in 2015 with Reid Bigland positioned in his stead. Earlier this year, Bigland was himself re-assigned, with Tim Kuniskis given the helm of both Alfa Romeo and Maserati brands. Now, with Tridente earnings in freefall, margins dramatically slashed and global sales for 2018 unlikely to break the 30,000 vehicle mark, Manley has enacted a fresh round of musical chairs, by re-appointing Wester.
Admitting that bundling both marques together was an error (if not one of his making), Manley nevertheless has not much by way of options. While neither is performing anywhere close to expectations, Maserati’s performance at least approached projections. Furthermore, the Maserati-branded products, being something of an FCA parts bin raid, kept development costs down, allowing, one assumes, a lower break-even point, even at considerable cost to credibility.
Maserati desperately requires more convincing products if it is to regain lost ground but even with a favourable wind, such vehicles remain a good two to three years away, ensuring several more years in the wilderness peddling the current range of faded fancies.
Alfa Romeo’s expensively developed and currently exclusive Giorgio platform is another rather pressing matter. Auto-analysts have speculated that the Biscione’s volumes are likely to stall in the region of 150,000 per annum by 2025, a fraction of the projected numbers. And if the investor community is correct regarding Alfa Romeo’s medium term prospects, Mr. Manley could conceivably conclude that there is only room for one failing upmarket Italian brand within FCA’s portfolio.
Sergio Marchionne’s plan for Alfa and Maserati was an audacious gamble which relied upon getting a sizeable number of highly elusive ducks in a row. The odds of success were never strong, but it’s obvious that it failed, largely because he tried to achieve too much too quickly with insufficient focus, attention, rigour and money.
Can his successor, faced with transformational costs of eye-watering magnitude right across the business he’s inherited continue down the same highly questionable and potentially ruinous path? Some tough and rather unpalatable choices must surely await.