Image source: Geneva Auto Show media gallery.
While Ford Motor Co. and General Motors are generating record profits right now, Fiat Chrysler Automobiles still has an immense amount of work to do on its turnaround story. Its biggest success thus far has easily been Jeep, which is very effectively growing sales in the U.S. and gaining ground globally. However, if FCA is gong to make itself more enticing to investors, the automaker desperately needs to expand its Alfa Romeo and Maserati lineups the same way it did for Jeep.
That will be a process that takes years, but Maserati's Levante will be one of the first big tests on that path for the brand.
Levante needs to deliver
Maserati is aiming to deliver a winner in the hot luxury-crossover segment with the Levante. The vehicle will have to pull its weight if the brand is to reach its goal of selling 50,000 units globally next year -- compared to roughly 32,000 in 2015 -- and then another step up to 75,000 in 2018. FCA notes that the worldwide market targeted by the Levante has surged 40% over the past five years to about 500,000 vehicles sold in 2015.
The thing is, this is Maserati's first SUV, so a successful debut is far from guaranteed, especially in a segment that boasts competition like the Porsche Cayenne. Add to that the challenge that this luxury SUV will have to fit all molds as it tries to rope in consumers in the U.S., Europe, and China markets. As it stands currently, deliveries in Europe will start as soon as May, while customers in Asia and North America will have to wait until July and September, respectively.
Maserati's Levante at the Geneva Auto Show. Image source: Geneva Auto Show media gallery.
While investors and consumers will have to wait to see if Maserati's first SUV is a success, it at least looks the part. The Levante will be sold with a 3.0-liter V6 twin-turbocharged engine with either 350 hp or 430 hp (depending on the trim), all-wheel drive, and an eight-speed automatic transmission. Maserati described the Levante as having sporty handling and performance, with the lowest center of gravity in its class and a 50/50 weight distribution between the front and rear. And it can all be yours for the low price of 70,000 euros.
So, besides the fact that sales of crossovers are surging globally, why is producing the brand's first crossover a no-brainer?
It's a simple answer: The margins are ridiculous. A crossover is simply an SUV built on a car's platform, hence the name. The automaker is essentially taking a vehicle platform that would sell starting around $16,000 as a car, and turning it into a crossover that can start around $27,000. The cost to make such a switch is roughly $543, as Ford Europe President Jim Farley noted in a recent article in Automotive News .
What's the key?
In my opinion, the Levante has everything it needs to be a winner, but the key will be its distribution and marketing in North America. Maserati plans to grow its dealership network in North America from 116 outlets to 130 by the end of 2016, up from about 50 dealerships as recently as 2012.
If it can succeed here right off the bat, don't be surprised when Maserati is able to surpass its goal of 50,000 units sold next year. However, if the design is a flop in the U.S. market, it'll be a couple of bumpy years for FCA's efforts to expand the luxury marque.
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The article Why the Maserati Levante Is Worth Watching Closely originally appeared on Fool.com.
Daniel Miller has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
