Fiat Chrysler’s luxury vehicle segment
In late 2014, Fiat Chrysler Automobiles (FCAU) announced its intentions to spin off Ferrari (RACE) as an independent entity. After the spin-off process was completed in January 2016, Maserati became the key vehicle brand left in the company’s super luxury vehicle portfolio.
In this part of the series, we’ll take a look at the performance of the Maserati brand in 1Q17 and what it means for Fiat Chrysler.
Maserati in 1Q17
In 1Q17, Fiat Chrysler shipped 11,700 units of Maserati brand cars, 75% higher than the 6,700 units it shipped in the corresponding quarter of the previous year. With this, revenue from its luxury car brand in 1Q17 rose 87% year-over-year to 949 million euros, or $1.0 billion. This significant rise in Maserati’s revenue was much higher than the rise in shipments due to a positive product mix and favorable currency movements.
While the company’s reporting currency is the euro, a large part of Maserati’s revenue comes from the United States. Therefore, the company benefits from a strengthening US dollar and a weakening euro.
Similarly, in the last few quarters, Japanese automakers such as Toyota Motor (TM) and Honda Motor Company (HMC) have also benefited from favorable currency movements due to the weakening Japanese yen. A strengthening US dollar typically has a negative impact on the revenues of major US automakers (XLY), including General Motors (GM) and Ford Motor Company (F).
Solid Maserati margins
In 1Q17, the Maserati segment’s adjusted EBIT (earnings before interest and tax) stood at 107 million euros, or $116 million. With this, Maserati’s adjusted EBIT margin rose to 11.3% for the quarter compared to just 3.1 % in the corresponding quarter of the previous year.
The brand’s improving profitability was primarily driven by continued high demand for the recently launched Maserati Levante model, which drove the company’s positive product mix. Continued strength in the Maserati brand could help Fiat Chrysler to achieve higher margin goals. Therefore, it’s important for investors to pay attention to Maserati’s performance.
Next, let’s look at Fiat Chrysler’s current debt position.