Why Maserati could be headed for trouble

The 109-year-old Maserati brand is the only luxury brand in the Stellantis family, but since it accounted for a little more than 1 percent of its parent's revenue and net income in 2022, Maserati is often only a footnote in Stellantis' financial statements.

Maserati has had a “boom-to-bust” financial record over the last 20 years. It has lurched from ambitious strategy to ambitious strategy with periods of financial misery interspersed.

Now, after a second year of profitability in 2022, (earnings of 201 million euros and an 8.7 percent profit margin), Maserati plans to almost double it margins in 2023 to 15 percent and sustain this level as part of a strategic push to get to 20 percent.

Management confidence is built on continuing their “luxury strategy” and adding a suite of new electric products -- one electric model for each model range by 2025 -- followed by full electrification by 2030.

Ideas to innovate in retail distribution are on the watchlist.

It is unclear how much of Stellantis' capital that Maserati consumes, but it is likely, given the brand's electrification plans, that it is significant relative to Maserati's revenue and earnings.

Maserati has a big challenge ahead starting in 2024 and beyond.

In the all-important U.S. market, Maserati has been very successful achieving a significant turnaround in discounting behavior since the end of 2019 (the average discount to list prices was 31 percent in December 2019 but was just 5.7 percent through May 2023). This improvement will support margin growth through 2023.

However, the average list price this month is close to a 10-year low: $91,873.

In addition, sales support is currently at a difficult-to-improve-upon 2 percent.

Sales impulses are set to come from the Grecale midsize SUV and potentially its new EVs, this means average list prices will fall further, and we think sales support payments will rise.

Porsche, in comparison, stands with an average list price of $104,388, with sales support payments at 11 percent. Porsche volumes are four time higher than Maserati's.

Is it possible that 2023 will be the last good year for Maserati for a while?

Electrification is not going to generate higher revenue and higher margins. Electric cars continue to re-value, both new cars and in particular used EVs. The average transaction price for a new Porsche Taycan has dropped 21 percent this year in the U.S. market, while the Tesla Model S has dipped 18.4 percent.

Electrification as a luxury strategy also seems doomed in its current configuration because the collection value of an electric car carrying the famed Maserati trident will be close to zero. At least without a feasible battery replacement strategy. Today in the U.S., a 10-year-old Maserati has a retail market value of 40.4 percent; after 15 years it is still 25 percent.

In our view, Maserati has had an esteemed history that may not continue in the electric car era. One can hope that they don't have all their eggs in the EV basket.