MILAN — Mike Manley, who last month succeeded the late Sergio Marchionne as CEO of Fiat Chrysler Automobiles, said the company will restore sales growth and profitability at its Maserati brand after a disappointing second quarter.
"I have confidence in the Maserati team to make up whatever the shortfall that they have had today saleswise," Manley said.
Maserati shipments in the second quarter fell 41 percent compared with the same period of 2017, mainly because of a 69 percent plunge in China shipments. Deliveries also declined in other areas, with shipments to North America down 22 percent and deliveries to Europe, the Middle East and Africa down 23 percent.
China was the main reason for the decline, FCA top management said.
Although recognizing that Maserati shipments fell in other areas in the second quarter, such as the U.S., "70 percent of the issue is all focused on China," Manley told analysts during a conference call to discuss FCA's second-quarter financial results on July 25.
In May, China announced that it would cut import tariffs for foreign-made automobiles and car parts to 15 percent from 25 percent as of July 1.
"Many car dealers held back their import orders and decided not to import until July 1," Wang Cun, director of the China Automobile Dealers Association’s import committee, told Reuters. Overall Chinese car imports declined 87 percent in June from a year earlier to 15,000 vehicles, according to CADA.
In the first half, Maserati shipped 17,200 cars, down 31 percent from 25,100 in the first half of 2017.
Profit wipe out
Lower shipments almost wiped out Maserati profits in the second quarter. Earnings before interest and taxes fell to 2 million euros ($2.32 million) from 152 million euros in the same period of 2017.
At the end of July, FCA cut forecast 2018 group EBIT by 1 billion euros. Maserati's problems account for about one-third of that reduction, said FCA CFO Richard Palmer.
Palmer told analysts that "one of the reasons why we've adjusted the guidance is because, frankly, the Maserati inventory position is too high. The way you resolve that is we need to execute better commercially, and so I think that's key for the second half of the year."
FCA has started to realign Maserati production with sales to cut inventories. According to Italy's biggest metal workers union, FIOM, the August closing at the Mirafiori plant in Turin, where the Levante large SUV is produced, has been lengthened to three weeks from the two weeks the company had announced in May. Two stoppage days were added both before and after the summer closing.
Maserati's sales have been increasing in recent years as its product range expands. The brand sold 50,000 cars in 2017, up from 12,000 in 2013, boosted by sales of the Ghibli large sedan added in 2013 and Levante SUV launched in 2016. At FCA's presentation of its five-year plan June 1, Maserati brand head Tim Kuniskis said sales would be stable at 50,000 in 2018, short of the initial 75,000 target of the 2014-18 plan.
FCA’s target is to double Maserati’s annual sales to 100,000 by 2022 and increase the operating margin to 15 percent. Maserati’s China problems contributed to a steep margin decline to 0.4 percent in the second quarter from 14.2 percent in the same quarter a year earlier. In the first quarter, its margin was 11.4 percent.
In a difficult market where price competition has moved to premium segments, a boost to sales is expected to come from the launch of new models. The 2018-22 plan for Maserati presented June 1 envisaged the addition of a midsize SUV and the launch of an Alfieri coupe and cabrio to replace the current GranTurismo and GranCabrio. The full range of vehicles would be electrified, with either battery or plug-in hybrid versions.