Is FCA’s Poseidon Adventure approaching its climax?
Last week, we examined FCA’s stewardship of Maserati and concluded that under the leadership of former CEO, Sergio Marchionne, several significant mistakes were made. Now that the carmaker is being lead by a newly constituted management team, what fate lies in store for the Trident of Bologna?
As has been reported, Maserati has seen a torrid 2018, shedding volume, margins and becoming an increasingly onerous drain upon the FCA business. At the end of October, as part of their responsibility to shareholders and the wider investment community upon which they are reliant, senior FCA management outlined the carmaker’s quarter three performance, in a question and answer session with investor-analysts.
Responding to one such query regarding Maserati’s poor 2018 performance, new CEO, Mike Manley had the following to say. “I think, for me, when I look at Maserati’s performance, it’s not so much a product issue, but more a management and focus issue. So I think we’ve had those things addressed. The product remains competitive.”
While we’d probably expect him to say that, what is quite evident is that while it may have been partly a focus and management issue, it has most definitely been a product issue as well. Because its apparent that not only do Maserati’s saloon offerings lack allure, they are conclusively not what the markets of China or the United States now appear to want.
It is apparent that a tipping point has been reached away from three volume saloons in favour of hatchbacks of various formats, be they CUVs or Panamera-style fastbacks. Given this seemingly inexorable shift, the future for Maserati’s saloons (in their current form at least) can best be described as bleak.
Maserati’s Levante is the newest of il Tridente’s offerings. The luxury CUV entered the market at a point when US market demand for large luxury CUVs slowed in favour of mid-sized offerings. Furthermore, owing to a dramatic contraction in Chinese market demand, (a market cited by FCA’s CEO as representing over 50% of current Maserati sales) the model, intended to grow the brand’s fortunes, is performing well below expectations.
According to an Automotive News report this week, FCA’s newly appointed European chief, Pietro Gorlier is set to announce plans aimed at increasing margins and plant utilisation in Italy in the wake of shutdowns and temporary layoff schemes. Citing union sources, it is suggested that this will include a new large Alfa Romeo branded CUV model, to be based upon the Levante platform, notionally to be built alongside it at stablimento Mirafiori in Turin. So much for Manley’s stated aim of separating Maserati from Alfa Romeo.
Some investors and commentators have suggested that the act of bundling the two Italian brands has raised the likelihood of both marques (or indeed the entire European operation) being offered for sale. And while Manley reiterated during October’s earnings call that he believes FCA can achieve all of its aims as it is currently constituted, the investor community remains fixated upon the performance and likely cash-drain of its troubled (Maserati) and as yet unproven (Alfa Romeo) nameplates.
With an estimated $6 billion soon to bolster FCA’s coffers following the sale of Magneti Marelli component business and speculation that next to be sold will be Fiat’s Comau automation arm, the financial righting of the FCA vessel appears to be well on course. However, such divestments, while looking good on paper are not necessarily redolent of a business confidently planning for the future of its European operations.
Of course for now, whether Mike Manley will divest himself of his Italian ball and chain remains a matter of speculation, but in the end it may not be his choice, rather that of an investor community upon which the car giant’s newly crowned head increasingly rests.