Fontana di Nettuno

Is FCA’s Poseidon Adventure approaching its climax?

Three Tridents. (c)

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.

Author: Eóin Doyle

Co-Founder. Editor. Content Provider.

16 thoughts on “Fontana di Nettuno”

  1. Maseratis have become what the Kappa Coupé used to called — a Gentlemen’s GT. But China and the US have so few gents these days that’s no future at all.

    Better to go for a small hatchbacky type vehicle, size of one of the bigger Fiat 500 estates, and fill it with ultra-lux features. This has saved Lancia’s Ypsilon for years.

    1. The world isn´t very suited to the gentleman GT, is it? It´s all so darn crowded. I´d rather go by train first class than struggle across Europe pulling in in a petrol station every five hours. Maybe one could rent a car at your destination?
      Ford´s Vignale Fiesta must be looking to take up the slack from the Lancia Ypsilon which must be nearing its end.

  2. Having just read of GMs plant closures in the U.S and the demise of brands that were instrumental in moving us into an electric future I fear we are witnessing more of this on an even grander scale.

    1. GM have had their Teutoburger Wald moment.
      After that bloody defeat the Roman empire contracted.

      So long as the blinders are pullled over the US public on oil consumption reliance on huge trucks will suffice. As soon as fuel-efficiency gets back on the agenda they are stuffed. I read an article about the preference for trucks. The author said consumers found trucks more comfortable than saloons. Does anyone think that that is true? Trucks have more load-space and are higher and wider but are they really more cossetting than a well-designed saloon? I don´t think so but I am open to counterpoints.

  3. What maserati needs is a step forward in terms of design. They are still cooking the same meal since the Maserati Quattroporte V and are not able to add new fresh flavours to it.
    Especially, the SUVs need a much more modern and more italian design. I would never guess, that a Maerati Levante costs more than a Volvo, RangeRover or even an Alfa Romeo Stelvio. No one would.

    What Maserati needs is a italian Range Rover Velar.

    1. That’s a very interesting thought – thank you, Markus!

  4. If I was FCA I´d be divesting anything to do with car manufacture except at the high end, if that. The writing is on the wall for a quite a few large-ish but but not terribly succesful groups.

    1. Would the Agnellis ever let Fiat go?

      Assuming they did, who on earth would buy it?

      VAG just might, for the share of the chauvinistic Italian market, and the production facilities in low-cost parts of Europe. They’re probably the only manufacturer in Europe contemplating setting up new factories, without closing others in high wage-countries.

      Carlos T might be tempted. Having turned Opel round to profit (at least on paper) in less than a year, he must be thinking no challenge is too big.

      The wild card is Tofas, but a more likely possibility would be a big Chinese carmaker. The success of Volvo under Geely shows the value of a living brand, rather than a revived nameplate like MG or Borgward.

      Lots of questions remain: should Fiat Professional be included, what is the worth of Fiat do Brasil, and where would this leave Lancia?

      That last is intriguing. If Lancia were in separate ownership from Alfa Romeo, their owner might savour the challenge of establishing themselves as Italy’s best-selling premium car brand. The hurdle is not exactly high…

    2. I´d probably just liquidate the assets as best as was possible. Some of the factories are on big sites near cities and would make great tracts for ugly new developments. Carlos Tavares is not silly enough to try and tame the Italian line-worker or the society he operates in. I like Italy for lots of reasons – and the Italians I know are super people. I am also concerned that Italy´s many internal problems are going to overwhelm it. In a less intereconnected world, Italian values could remain local and locally fixable. In a global world unreliability does not cut it. Fine for making food and growing things and making things in family contolled single-site enterprises. Not fine for car making on the large scale. Fiat Brazil….oh dear. Under Bolsarono…. not promising.

    3. Please do not underestimate the power of Italy’s North as an industrial region. Lombardy and Piedmont are home to an amazing number of industry leading companies and the region is rougly on par with Germany when it comes to economic indicators.
      It’s just as a friend from Milan states that ‘Africa starts behind Modena’ (statement expresses the personal opinion of the issuer, not the author).
      It’s the Mezzogiorno that’s dragging them down and sometimes it’s small wonder Lega Nord has so many followers.

  5. Richard… re the comfort of trucks…last year while visiting the U.S I had a 200 mile ride in an extended cab 4 door all aluminium Ford P.U and found it to be very comfy, virtually silent, great seats and equipped with all the toys. The negatives are getting in and out of the thing and feeding it. Their size is not a problem in a country of space but its upsetting to see lone drivers cruising about completely oblivious of the inefficiency being demonstrated.
    The return journey also in the lap of luxury was in a top range Hyundai Genesis also impressive but obviously of traditional low stance. This means one is confined to a chosen seat where the truck allows more movement in the cabin if agile enough.
    I fear the widespread adoption of this segment will spill over into EVs which will
    waste more resources while owners gloat thinking they are doing their bit.

    1. Trucks are also comfortable because the huge wheel and tyre diameter renders roads far less bumpty — and they don’t have the tiny aspect ratio that a Panamera will have, for exsample.

    2. Maybe it is also a function of trucks not being designed for handling but comfort. Think about how so many car reviews bang on and on about handling and the market leaders in prestige saloons are handling orientated. I am pretty sure that if car makers put their minds to it all cars could be as comfortable as the average comfortable truck: fatter tyres and softer suspension plus more insulation. Case closed: car reviewers killed the saloon. Buyers went for trucks where handling was not an issue.

  6. Compared to 3 or 4 years ago when Marchionne was trying desperately to shop FCA around for alliances or mergers, the group is now reasonably well off. Surely people here can download and read the 3rd quarter 2018 results the same as I can? The exception is Maserati which managed to sell only 26,400 cars globally to the end of September 2018, compared to 35,500 in 2017; earnings at Maserati before income tax are at 5.1% of revenue compared to 13% last year.

    On the other hand, the group plans to keep several Italian factories running in the future by building more Jeeps including a new baby puddle jumper. Fiats and Lancias essentially get no mention, so Polish production looks safe while the clock runs down on these out-of-date vehicles. No money in them.

    As for the ride quality in pickup trucks – it’s been known for at least eighty odd years that a longer wheelbase delivers a more pitch-free ride. Even with rear cart springs, but with lots of sound-deadening insulation, the isolation of Body-on-Frame construction, thick tires and modern bushing tuning mean that these prairie schooners are quiet and comfy. Their wheelbase is generally about 12 feet, like a Roller. People like them, and no amount of finger-wagging about fuel economy changes their minds. To owners, and there are many on my street, criticism of trucks is just peevish enviousness from people driving little cars. Been like that for decades, ever since traditional big American cars bit the dust.

    The FCA RAM trucks ride the best, since they have rear coil springs and real axle location instead of mere leafs, and you can order Air Suspension all around if clangy metal springs annoy you too much. They’re just too big for me, but with 15% of the market and the longevity that stout construction provides, they last at least half again as long as cars, so there are many everywhere. With the 3.5 twin turbo Ecoboost in the Ford F150 and 6.2 litre in upmarket GMs, they’ll trample most cars, getting to 100 mph in 15 seconds or less. The chavs use the power, too. It’s a far different world from Europe.

    New Mazda3 was shown here today. The hatch looks a bit bunkery with tiny windows, but is curvy at the rear, likely lacking rearward vision. It’s back to a torsion beam rear axle, though, but AWD is on the table.

  7. The phrase ‘ever-decreasing circles’ comes to mind about FCA and its European marques in particular. Each brand seems to be in some form of retreat. Each relaunch of each brand seems to run out of steam a little quicker than the last. Each car launched seems to suffer from alarmingly fading sales after the initial gloss has started to fade. The only possible exception I can judge is the Alfa Giulia, which seems to be doing OK in the UK, and of course the ever-green Lancia Ypsilon in the Italian market.

    1. That´s an apt précis, concise and accurate. The accelerating loss of competitiveness is a vicious problem. Customers don´t come back. Conquest sales aren´t made. The lack of demand lowers residuals further blunting the appetite of customers to dip their foot in the Fiat bath. Postive feedback of the worst sort.

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