High-End Drag Race Sales of luxury brands at Fiat Chrysler
2013
2014 $3.7b
i rar Fer
M as er at i
$3.1b Maserati’s gains may help Fiat fill the profit gap after Ferrari is spun off
$2.2b DATA: COMPILED BY BLOOMBERG
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in 1969 and gradually increased its stake to 85 percent. Fiat bought Maserati from Ferrari in 1993. Marchionne announced a Ferrari spinoff late last year to raise cash to help pay down some of Fiat’s debt. Maserati’s always been seen as very high-end and out of reach, which could be a problem. The brand “seems unattainable often even by those that are in the luxury category,” says Alexander Edwards, managing director of Strategic Vision, a marketing research firm in San Diego. Maserati’s entry-level sedan, the Ghibli, starts at $69,800, more than its two closest competitors: A comparable BMW 5 Series costs $49,950, and Mercedes’s E-Class starts at $52,650. Introduced in 2013, the Ghibli at first sold well in the U.S., but in recent months dealers have aggressively discounted the model. “Margins have just gone down the drain since its introduction last year,” says dealer Mark Akbar of AutoNation. Maserati more than doubled global shipments, to 36,448, in 2014. But it’s stumbled recently: This year through April, sales fell 9 percent from a year earlier, to 7,306. Maserati’s first-quarter profit fell 39 percent, to $40 million, which the company attributes to a slowdown in China. To broaden its appeal—global sales didn’t crack 10,000 until 2013—Maserati, which sells four models, will add the Levante SUV in 2016 and the Alfieri coupe sometime later. SUVs make up about half of luxury car sales in the U.S. Marchionne sees the brand as the linchpin of his €48 billion ($53 billion) plan to turn Maserati, Alfa Romeo, and Jeep into global brands and boost net income fivefold. The money will go to designing and building new models and expanding into new markets. Marchionne has pledged to raise
Maserati profit margins to 15 percent from 10 percent and almost double global sales by 2018, to 75,000, the number at which Marchionne plans to cap production. “If we push the volume out, we will pay the price, and that’s something we can’t afford,” Marchionne says. “You need to let the market take cars as they come.” Increasing profit will be crucial to Fiat generating sufficient cash to develop cars and technologies—a tall order, analysts say. Expanding the number of U.S. dealers will help. “They’ve got a hell of a lot to build on,” says Joe Phillippi, president of Auto Trends Consulting, in Short Hills, N.J. “But it’s incredibly expensive to play the game. Marchionne can’t afford to stumble.” —Mark Clothier The bottom line Fiat Chrysler’s CEO has pledged to double global sales of Maserati, to 75,000, by 2018.
Austerity
A Greek Business Weathers Tough Times A fashion designer worries about the future—but vows to stay on “I had such an urge to start something that’s mine”
Pavlina Papailiopoulou is looking for optimism wherever she can find it. As Greece and the European Union tussled over the country’s debt, the 33-yearold fashion designer and business owner tried to put a smile on the crisis, posting this message on her company’s Facebook page: “Dear all, Days are tough
we know .. but it is summer SALES time, so smile and the world will smile back at you. (Europe give us a smile, come on) a, ippolito.” Things weren’t quite so grim six years ago, when Papailiopoulou founded the fashion label Ippolito. She designs all the handbags and accessories sold in a boutique that’s located in Syntagma, a touristy district in central Athens. Everything, from €40 ($44) wallets to €390 backpacks, is handmade at a small leather workshop nearby. Even under the best of circumstances, setting up a business in Greece is tough, given the red tape and bureaucracy. But now Papailiopoulou is struggling to run a fashion line when capital controls are in place, banks are closed, and local customers are scarce. Meanwhile, Greece’s Parliament is wrestling with whether to accept a new bailout and the increased austerity that will come with it. “I consider myself lucky, being in Syntagma,” she said, just before the recent referendum. “Fortunately, I had two tourists in the shop yesterday, and today a Greek woman came in and bought something. I was extremely surprised. I said, ‘Thank you so much.’ And she said, ‘In case we go back to the drachma on Monday, I want to own one of your bags.’ ” Small businesses have sprouted up during Greece’s crisis years: designers like Papailiopoulou selling clothing and jewelry, winemakers and olive growers trying to compete on a global scale, shop owners of all stripes. Greece’s small-business owners “I missed home. I were anxious even just wanted to before the latest turn in the crisis. Many had come back to family, friends, the been forced to close. sun, and live a Papailiopoulou connormal life.” siders Greece leaving —Pavlina Papailiopoulou
FROM LEFT: PHOTOGRAPH BY EIRINI VOURLOUMIS FOR BLOOMBERG BUSINESSWEEK; KYOTO/AP PHOTO
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