Maserati to bounce back from China hit, new FCA boss says

MILAN - Mike Manley, who last month succeeded the late Sergio Marchionne as chief executive of Fiat Chrysler Automobiles, said the company will restore sales growth and profitability to the Maserati brand after a disappointing second quarter.

"I have confidence in the Maserati team to make up for whatever shortfall they had today in sales," Manley said.

Maserati shipments in the second quarter decreased by 41% compared to the same period in 2017, mainly due to a 69% increase in China. Deliveries were also down in other regions, with deliveries to North America down 22% and deliveries to Europe, Middle East and Africa down 23%.

China is the main reason for the decline, a senior FCA executive said.

While acknowledging that Maserati's shipments fell in other regions in the second quarter, such as the U.S., "70% of the problem is focused on China," Manley told analysts on a conference call to discuss FCA's second-quarter financial results on July 25,

In May, China announced that it would reduce tariffs on imports of foreign cars and auto parts to 15% from 25% as of July 1.

"Many car dealers postponed their import orders and decided not to import until July 1," Wang Tsun, director of the import committee of the China Automobile Dealers Association, told Reuters. Total Chinese car imports fell by 87% in June from a year earlier to 15,000 vehicles, according to CADA.

Maserati shipped 17,200 cars in the first half, down 31% from 25,100 in the first half of 2017.

Zero profit

Lower shipments nearly evaporated Maserati's profits in the second quarter. Earnings before interest and taxes fell to €2 million from €152 million in the same period of 2017.

At the end of July, FCA reduced its 2018 EBIT forecast for the group by €1 billion. Maserati's problems accounted for about a third of that reduction, FCA Chief Financial Officer Richard Palmer said.

Palmer told analysts that "one of the reasons we've adjusted management is that frankly, Maserati's inventory position is too high. The way you decide is we need to execute better in the commercial network and that's why I think that's the key to the second half of the year. "

FCA began to reorganize Maserati production with sales to reduce inventories. According to Italy's largest metalworkers union, FIOM, the August shutdown at the Mirafiori plant in Turin, where the Levante large SUV is produced, has been extended to three weeks from the two weeks announced by the company in May. Two shutdown days were added both before and after the summer.

Maserati's sales have increased in recent years as the product range has grown. The brand sold 50,000 vehicles in 2017, up from 12,000 in 2013, boosted by sales of the Ghibli large sedan added in 2013 and the Levante SUV launched in 2016. In unveiling its five-year plan to FCA on June 1, Maserati brand head Tim Kuniskis sales will be steady at 50,000 in 2018, compared with an initial target of 75,000 for the 2014-18 plan.

FCA aims to double Maserati's annual sales to 100,000 by 2022 and increase operating margin to 15%. Maserati's problems in China contributed to a sharp drop in margins to 0.4% in the second quarter from 14.2% in the same quarter a year earlier. In the first quarter, its margin was 11.4%.

In a tough market where price competition has moved into premium segments, sales are expected to increase from the introduction of new models. Maserati's 2018-22 plan, unveiled June 1, calls for the addition of a midsize SUV and the launch of a coupe and Cabri Alfieri to replace the current GranTurismo and GranCabrio. The entire lineup will be electrified, battery-powered or hybrid versions.

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