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 The German sportscar maker has set the standard for multiplying
sales of an expensive brand without damaging the exclusive image
that reaps big profits.
Fiat Chrysler Automobiles Chief Executive Sergio Marchionne wants
Maserati to be for the Italian automaker what Porsche is for its
parent company Volkswagen <VOWG_p.DE> — a formidable source of
profits that are less vulnerable to swings in the economy than the
group's mass-market brands.
Maserati has Italian allure and a recognized sporting heritage. But
Fiat Chrysler, the world's seventh-largest auto group, sold just
15,400 of the growling, muscular sportscars last year — not yet
enough to change the group's fortunes — compared to Porsche's sales
of over 160,000.
Porsche's 18-percent automotive operating margin — the rate of
underlying profit on its sales — has made it a more valuable company
than rivals selling millions of cars each year. Even in the premium
sector, the average margin is only 10 percent.
Porsche contributed less than 2 percent of VW group sales in 2013
but about 22 percent of its operating profit. Maserati's trading
profit tripled last year but still contributed just 5 percent of
Fiat profits and less than 2 percent of sales.
By 2015, Marchionne wants to be selling 50,000 Maseratis. The goal
hinges on a rapid take-up of new models designed to appeal to a
broader variety of driver tastes and budgets.
Maseratis are priced at around a 20 percent premium over
similar-sized rival German cars, so the product offensive must not
cheapen the brand.
DEFYING EXPECTATIONS
Porsche managers faced the same dilemma two decades ago when they
were mulling a cheaper sportscar to complement the 911.
The Boxster took wing in the face of deep skepticism among Porsche
fans disappointed by previous failures to develop a worthy
stable-mate for the 911.
An earlier 928, which broke with Porsche's tradition of rear-engine
layout, had a quirky, rounded form and pop-up headlights and shared
few parts with the 911. It never matched the 911's popularity and
production was halted in 1995.
The Boxster blew away expectations because its styling, engineering
and performance were not dramatically different to the 911 but the
price made it accessible for far more customers, thanks partly to
more common components shared with the 911.
It gave Porsche the confidence, and the expertise in cross-platform
manufacturing, that later informed the Cayenne and the new Macan
sport-utility vehicles that broke with the brand's pure racing,
two-seater sportscar heritage.
"Porsche subjected itself to the most radical changes in production
and management without shunning the risk of expanding into new
segments," said Stefan Bratzel, head of the Center of Automotive
Management think-tank near Cologne. "They managed to preserve the
brand DNA which gives them special pricing power."
Fiat Chrysler has its own past failings to learn from. The Italian
group has spent many years trying to craft a successful industrial
entity out of a host of brands, from Fiat and Alfa Romeo to Lancia
and Ferrari.
Marchionne hopes to bring Fiat Chrysler back to profit in Europe by
2016. Some analysts are skeptical of his targets for Maserati, given
his record for ambitious goals that sometimes fail to materialize.
Soaring demand for ostentatious wealth symbols among the new rich of
China and other emerging markets is likely to ensure some of
Maserati's hoped-for sales growth.
In developed markets, success depends more on stealing customers
from rivals like BMW <BMWG.DE>, Mercedes <DAIGn.DE>, Audi and
Porsche — a tougher challenge.
Like Porsche, Maserati will use its parent company's economies of
scale in purchasing, production and distribution, enhanced by Fiat's
marriage to Detroit icon Chrysler this year.
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Fiat has invested around 1.5 billion euros to revamp a plant outside
Turin, where recent models are built. It plans to invest 1 billion
more at Mirafiori in Turin where its first SUV will be built from
2015. Maseratis could share assembly platforms there with higher-end
models of a relaunched Alfa Romeo brand.
Such common platforms make it easier for low-volume car brands to
turn a profit. Porsche has shown with the Cayenne that an expensive car can
share some parts and processes with a sub-premium model — VW's Touareg — without damaging the brand.
"THINGS TO COME"
Maserati's product offensive is the most ambitious yet for the brand
founded a century ago in Bologna by five brothers and which Fiat
bought in 1993.
Its line-up includes a four-door GranTurismo sedan, the two-door
Quattroporte coupe and the compact, lower-priced Ghibli. They will
be joined next year by its first SUV, the Levante.
The GranTurismo offers a cabriolet version, the GranCabrio, while
the Ghibli is the first Maserati that also comes with a diesel
engine.
The Ghibli's price tag of around 70,000 euros ($97,200) — well below
the Quattroporte's 100,000 euros — seeks to attract well-heeled
younger buyers. Maserati CEO Harald Wester says any further push
downmarket to boost sales is not on the cards.
At the Geneva car show last month, Maserati presented a prototype of
the Alfieri, a sporty two-seater which Marchionne said "could
complete the Maserati lineup". He said the Alfieri was only "an
indication of things to come". Maserati will give more details on
its industrial plan in early May.
Amid a confusing array of vehicles to lure the world's wealthy,
Marchionne is betting Maserati can still offer something unique:
Italian beauty and design on the exterior and the raw horsepower of
engines made by sister brand Ferrari.
"The bigger BMW, Mercedes and Audi are getting, the more consumers
will look for differentiation that the 'smaller' premium and luxury
brands can offer," bank Macquarie said in a note.
While such differentiation is a competitive advantage, industry
consultants say it could also be Maserati's weakness.
"Maserati has a very distinctive place in the industry, but really
not many people know what it is and what it stands for," said Peter
Wells, head of the center for auto industry research at Cardiff
University in Wales.
He said Maserati's factories and production systems were impressive,
but it was not clear where the company was trying to take the brand
to secure those extra sales and compete with rivals popular in
emerging markets such as Jaguar.
Fiat Chrysler bosses appear to acknowledge the challenge, saying
they are avoiding a faster sales push to give themselves time to
develop the Maserati brand and its worldwide appeal.
Maserati aired a 90-second video spot during the Super Bowl — America's most watched football game of the year — to put the brand
on the shopping list of wealthy U.S. consumers.
The advert, which said you do not have to be the biggest to take on
"the giants", was very effective, said Lincoln Merrihew, an industry
consultant at Millward Brown Digital.
"Maserati has a beautifully sounding name, the cars are very
attractive and there is romance behind it," he said. "They need to
keep that momentum, grow sales briskly — but not too fast."
($1 = 0.7201 euros)
(Additional reporting by Andreas Cremer in Berlin; editing by Tom
Pfeiffer)
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