Ferrari to Cut Production - Protect Exclusivity

European sales are very weak, especially in Italy.

Dave

 

Not sure how much difference a 4% drop in build numbers will make on resale values. I doubt much.

 

Makes a much more plausible explanation than the reference to Enzo, the brand and exclusivity. Its very simple economics most likely. Also the stores are bringing in a nice touch of revenue as well.

 

The article probably came from the interview this weeks in Automotive News:

Ferrari CEO aims to boost exclusivity, not unit sales


MARANELLO, Italy -- Times are good at Ferrari. Last year, the Italian sports car maker had record global sales of 7,318 units, which is 50 percent more than when Luca Cordero di Montezemolo became CEO in 1991.

But Montezemolo, now the company's chairman, has not forgotten the tough times -- such as the 1993 economic crisis that caused Ferrari sales to fall to just 2,325 units. Back then, Ferrari was not nearly as diversified as it is now, which is why Montezemolo expects the automaker's financial gains to continue even if unit sales are static.

Montezemolo discussed his outlook for Ferrari during an interview at the automaker's headquarters with Automotive News Europe Editor Luca Ciferri.



Q: Will Ferrari improve this year on last year's sales record?

A: So far this year we are doing well. The new LaFerrari was sold out even before its public unveiling at the Geneva auto show. Despite this, my focus this year and in the years to come is not to grow volume but to increase the exclusivity of Ferrari. This protects our margins and residual values for our customers.



What is your targeted operating margin?

I want Ferrari to remain at around 15 percent as we had a 14.4 percent margin last year, and it was 14.1 percent in 2011. This will be challenging because we are facing an intensive investment program.

The LaFerrari is a completely new model whose innovative technologies will influence all our future models.

We are not in a hurry to renew our range, as our oldest model is the 2008-launched California, which was upgraded in 2011. Nevertheless, to renew five models is a titanic effort for a small company such as Ferrari.

What is the average life cycle at Ferrari?

Generally seven years -- on some models it is eight.



When your cheapest car, the California, starts at $201,290 in the United States, how do you plan to make Ferrari models more exclusive?

Our revenue per unit is growing thanks to a higher grade of options and to the expansion of our Tailor-Made customization program. On average, a customer adds options worth $33,000, which is 10 percent of the retail price. Another way to personalize a Ferrari is our Tailor-Made program, which adds $65,750 on average. This results in more personalized, more unique cars that keep a higher residual value over time.



Are classic cars also a growing business?

We have expanded our Ferrari Classiche workshop to restore and certify authenticity of our past models here in Maranello. We are also considering opening a subsidiary in the United States, probably in California.

The U.S. is our largest market not only in terms of annual sales but also when it comes to the total number of Ferrari models on the road. For some minor restorations, a workshop in California would save the significant cost of shipping the car back and forth to Maranello.



How important is your third profit center, the licensing business?

Last year licensing and merchandising contributed $66 million to our bottom line, and this unit continues to grow. We have more than 50 Ferrari retail stores around the world.

In May, we will open a completely refurbished store here in Maranello that is double the size of our original store.



How much of a revenue contribution does your theme park in Abu Dhabi provide? Do you plan a second theme park?

The Abu Dhabi park makes a significant contribution, which is included in our licensing revenue because we do not own it. Another theme park would be an interesting development, possibly in Asia. But let me add this:

Last year we had 250,000 visitors at our Galleria Ferrari museum here in Maranello, and this year we expect about 280,000. I'm still amazed by the number of people we are attracting to a city with a population of about 17,000 people.

 

Spin.

Seriously, if they really wanted to improve exclusivity, would it be by only 4%?

Sales are down. The F12 isn't ramped up yet, the 458 coupe has run it's course and the Corsa version isn't due until next year, the FF was never going to be a big seller, the California is waiting for it's new edition so sales are slow, and the La Ferrari won't go into production until next year.

I think US sales are flat to up a bit. Europe though is in the dull drums and there's only so much more you can do in Asia to make it up. If there is any good news here, it's that they are trying to keep waiting periods long to try to prop up resale values.

They are cranking out 458 spiders as fast as they can. It's the bread and butter now.

As to licensing, it's really, really small compared to car sales. Their biggest income is from 1) video games 2) clothing (t shirt, hats, etc) and 3) toys. The rest is just peanuts. Like any licensing though, it's by far the most profitable part of the business. You have a small staff to run it and people just send you a check each month.

 

Totally.

 

Ditto especially as years ago they expanded their productive capacity to 10K per year when they introduced the Calif.

 

Spin? Or smart business? Winkleman at Lambo also predicted less production in the exotic car market for this year. I lean towards the latter. Also what was left out of the article above was the employee bonuses for this year. Very nice

For most Italians, the dream job is to work at the Ferrari factory in Maranello. Now, to make the dream even more out of this world, Ferrari boss Luca Di Montezemolo has announced that he will be handing out a $6,000 bonus to each of Ferrari’s 3,000 employees.

''Our company ended 2012 with record results after a triennium of continuous growth,'' Montezemolo wrote in a letter to the employees.

“In the current extremely difficult economic climate, which has seen many companies in our sector and others, experiencing great difficulty, thanks to you, we are a really nice exception to that, a company producing ever more models and one which is recognized as a great brand everywhere,” Montezemelo added.

 

It´s not the best moment to build expensive cars as if there was no tomorrow, that´s for sure.

I wonder what´s going to happen with Maserati and their plans to build 50,000 cars. I´m afraid that they´re going to have a rude awakening.

 

i'm all for this. protect the brand. too much dilution going on. porsche is as common as a honda now.

 

More common where I live.

So many in fact we have an auto shop for the Pcars in the valley so we don't have to go to Denver for service.

 

Hopefully they won't get the word in time and flood the market with cars they need to dump at 30% off sticker. I want to buy a couple Masers in the next year or two, one of the SUV's and a GT vert.

I like this, too. I find it hard to believe my 612 could drop very fast from where it is, and this can only help. I may not like it so much in two years when I want the next one though.

 

If this is really true, not that Ferrari would ever lie, it is the old school Ferrari dealers that will get hit in the shorts. Of course, they will make lots of money off the new supercar, but that only goes so far.

Dale

 

I figure it's 50/50 spin and market realities.

The economies of the developed nations are in a rut. The Euro disaster keeps up with the drip, drip, drip pace as everything unravels. Italy and Greece have austerity imposed upon them, and the French have an anti-capitalist government again. Then there's the Obama administration, which wants the US to go down the same road as Europe. Not exactly a climate that is ripe for supercar sales.

But not to worry, as soon enough Ferrari will be selling more cars in the Dakotas than in Dubai, due to the oil boom up there (With reserves that dwarf what is in Arabia).

But I can la-dee-da as the economy in Texas rocks. HA!

Cheers,

George

 

Seriously... If you want exclusivity, buy a Lotus.

 

Competes with Jaguar? This I didn't know!

 

of course its spin. but still not a bad idea - cut back on production since sales are down, announce it as an exclusivity push.

but reading between the lines, it seems to me that they will likely be producing just as many and more overall units, but they will be branded maserati int he form of those v6 varients and those cars will be aimed at a completely different demographic.

and those spare engines may even end up in some interesting stuff........

as for resale prices, i can tell you from my perch in geneva that the newer stuff is falling like a rock. all the 10 year old or older cars are staying more/less where they were, but the new stuff is going begging. literally hundreds of last decade cars for sale on the used market and this is a small country (albeit with the second highest per capita ferrari ownership after monaco).

 

I did hear from an informed source recently that Ferrari sales in Italy and Spain and some other parts of Europe have collapsed in the last year, and that the increased Asian demand is not enough to cover that.

Perhaps it's just a way of putting a positive spin on the fact that their car sales have fallen. Rather than admitting that, Ferrari say it was intentional, to make the cars "more exclusive"

What it also implies is that dealers ( perhaps with factory support ) have had to discount to move inventory. By reducing the supply prices should come back to "normal" as the supply=demand


Also, in the press release
"In tandem with the cut in production, Ferrari plans to invest 100m euros (£85m) over the next two years on improvements at its Maranello factory, where 3,000 people work on building 32 cars a day."

7 day week : 32 x 365 = 11680 cars per year
5 day week : 52 x 5 x 32 = 8320 cars per year.
= They have heaps more capacity than they are currently using,

Aside from a "slow" market generally, I suspect California sales have never been as strong as anticipated.

M

 

i dont think they work on weekends. have been to maranello a few times on a weekend and its dead.

 

Hey folks, saw this on yahoo motoromic section on the front page this morning. Yes I should paste the link BUT it AINT working today, any help would be great. It does refer to the "exclusivity" of the brand and wanting to keep it that way for those that buy one, to protect the dream as they say. I think this was discussed under another thread ...Doc

 

Who would've thought there would be a hybrid Ferrari? I think as time goes on, the interest in cars will be less and less with young people. We're already seeing that with kids, who'd rather have a smart phone or computer than a new car, and applications for drivers licences are down. I think when they are ready to buy in the future, they'll be looking for tech gadgets, and not necessarily performance, and full electric will be cool for them....
So, Ferrari and others will follow where the money is. Look at what happened with the manuals in cars.

 

Yeah I remember that number too. That was Luca's goal from a few years ago and it sounded dubious for several reasons.

-F

 

I'm sure it's both exclusivity and harder times in European sales. Granted I live in San Diego, but the 360-F430-458 do seem less exclusive: I saw several 458s in the used car row at the Ferrari dealer last weekend, and they seem too available for values to hold up well.

(Also seem about on par with the mid-engined Porsche Cayman in terms of production quantity.)

Meh... P&R topic, but Europe and the US are in different places economically. Boehner and Ryan -- who are finding it increasingly hard to find economists willing to agree with them -- want us to be in full-on European austerity mode. Ferrari should count its blessings in the US.

Truth. Every time I see a Lotus around here, it's the same guy.

 

This from a company that announced Enzos would be a limited production of X (400?), and the telaio nuts have proven many more than X were produced.