GM rebuffs two-class share plan from Einhorn's Greenlight Capital
General Motors Co on Tuesday rejected a proposal by billionaire investor David Einhorn to split its common stock into two classes to help boost its share price.
MILAN As Fiat Chrysler FIA.MI moves to reinvent its small Maserati brand as a serious rival to the world's luxury car makers, the pressure to succeed is all the greater for the startling success of Germany's Porsche.
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.
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.
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 line-up". 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)
TOKYO The board of Japan's Toshiba Corp has approved a Chapter 11 filing for its U.S. nuclear unit Westinghouse, the Nikkei business daily reported on Wednesday.