Why has Ferrari abandoned the upper middle class ?

I don't necessarily disagree with what you wrote.

However, I do find it somewhat of a conundrum that Enzo, after he sold the company to Fiat, hated the fact that people were buying his products (products sold with his name on them) as mere status symbols. From the accounts I have read, I don't believe Enzo was ever comfortable with the idea that his "Ferrari" cars were morphing into toys for the ultra-rich.

For most of Enzo's stint at the helm of his company (pre-Fiat), Enzo built cars that, while expensive, were still accessible for "gentlemen racers" who placed a high value on owning and driving exceptional cars. One had to have some means to buy a Ferrari, but they were not intended solely for the rich.

But, a lot has change since then. And Enzo's business model was failing by the end of the 1960s.

 

Well before the sell off Enzo was quoted as saying he had regrets that his cars were priced to high for the young drivers who might use them in the way he intended.

 

yep. and the 991 is going to move the whole 911 line that direction.

given the success of the SL/Cali/DB9/Masers, not a surprise. lots of $$ and good margins in that sector of the marketplace.

 

Part of the reason they can charge what they do, is that (up until recently); it was incredibly easy to finance a car in Ferrari's category. In the 308 era, you were a truly rich as financing of exotics was very limited.
Ferrari moved pricing upstream as cheap credit became the norm
Kevin

 

Part of this is due to the fact that they can add a lot of comfort and still provide more performance than anyone can use on the street. As the Baby Boom market segment ages comfort becomes more marketable.

Awaiting snide comment from Chas

 

Ferrari actively markets their USED cars and their Maserati sister company to this market. Additionally, when Alfa comes back to the US, they will also hit the target in question.

Right now, Ferrari sells all the new cars they want. No, they don't have 3 year waiting lists, and yes, they shut the factory down for a couple weeks this year to let supply and demand balance out a little, but overall, they're not hurting for business at their current price point.

Could I buy a NEW Ferrari? Certainly. Would I? Hell no. As a member of the great unwashed upper middle class, I know that tossing $75K of my money out the door, never to be seen again, the minute I drive a new Ferrari out of the showroom is absurdly wasteful. I'd NEVER do that. But I could. Ferrari would finance a car for me. Take my 360 in trade, and a medium sized pile of cash, finance the difference and I'd roll out with a new one. But that ain't gonna happen because I choose not to let it happen.

I don't think that Ferrari has abandoned us.

Hell, Algar has a dozen used cars that I could buy tomorrow. THAT'S THE MARKET they want us in. The UMC provides the market for their used stuff. Without that, they can't sell the new stuff either. The guys who buy new want to unload last year's model at the dealer. Without us UMC buyers, that downhill flow stops.

Simple economics. Ronald Reagan would be proud.

D

 

But Jerry, think if you're looking at serving "markets" (aka the middle class market and the upper class market), Ferrari DOES cover this very well -- thanks in great measure to owners.

There's tons of great less than 10K mileage (which are practically new) Ferrari's in the sub $130K category that dealers sell everyday.

We have the best of both worlds. We have used cars that are terrific almost new machines for the upper middle class AND premium exclusivity for new car buyers.

Anyone who says they can't afford a Ferrari but still owns a new BMW or luxury SUV just has their priorities wrong.

Ferrari doesn't need a "new" model car for that category. It has plenty of cars in that price range to sell as it is.

 

Upper middle class can get a new Ferrari, just it's pronounced Maz-Er-Atti

 

I'm not sure.
While a BMW or MB may be at the same price point they have a much higher usability. I'll be taking my BMW out in tomorrow's snow storm. Is there a Ferrari in this price range (or any at all save the FF) that can be used tis way? If not you have to add the price of another car to the cost of the Ferrari.

 

You're right... I'm talking Southwest here. Not that snowball frozen zone some of you call "home".

Believe it or not, there are people who do use them literally as daily drivers somewhere in the world!

 

Don't I know that, 6 inches tomorrow 12 on Wed!
We still are part of the market though.

 

Hurt the brand (which is why the Dino was a "Dino" originally).

First, waiting lists will be long making mark ups crazy.

Second, performance would suffer (do we really want a Ferrari slower than a Ford raptor truck?)

Third, it damages the used car market which brings down the resale values across the line.

The 130 to 75K market is full right now of lots of great Ferrari machines. Why would you want a lower performing new model just to have 10,000 less miles on the car?

If you want to make a new Dino, that's fine. But, it's still not a Ferrari, just as the Maserati is not even though it has an engine and engineering from Maranello.

 

I was taught to respect my elders, good sir

 

Grumble, grumble, grumble.


As we used to say in 17th Cent. France "Touche' "

 

(in semi-random order)

1) As many have stated, Ferrari is on a roll of late. While 20 years ago they were "a" premium maker of cars, now they have really pulled away from the pack. As such, better things cost more.

2) One of the reasons they are leading the pack is technology. Very expensive technology.

3) With the rise of emerging markets (China et al) more big dollar players are out there to write checks.

4) Why does Fiat sell them for so much? Because they can.

To wit: Flip your question. Why do people pay so much for a modern F-Car? When a $35,000 Evo can at least show up for a fight and a $90K GT-R can frankly keep up with many $500,000 cars, why do people pay so much for Ferraris and Lamborghinis?

The truth is this. It's not about mechanical performance. (pulling a statistic out of my backside) 97% of Ferrari and Lamborghini owners don't have the skilz to push the cars anywhere near their limits. And if you really believe people buy them for the performance then how come so many Ferraris never get driven?

In my case, it is mechanical art. (I'm not a status symbol guy) I think the F430 is art. (from an engineering and an aesthetic point of view) But as an old school car guy, if I just want a car to push to the limits of my driving ability I can buy an Evo for less than the first years depreciation of a new F-car and I confess, I'd never drive the thing to its limits.

 

Ah Ha! I get your conundrum and why you're confused. (er my word, sorry)

It all has to do with price elasticity. http://en.wikipedia.org/wiki/Price_elasticity

Just because volume is lower DOES NOT mean they make less money. When every consultant in my company was charging $62.50 an hour I charged $75. I made more money because I was in higher demand. When they all went to $75 I jumped to $100. I lost some clients but I still made more money.

Of course, you can only push the bounds of price elasticity if you offer a premium product to the market. There is no doubt Ferrari does that in spades.

Would it be financially beneficial to offer a lower end product? Well, I doubt anyone here has the background to answer that question. But I personally doubt it.

 

Ha! see my point about price elasticity. They might be leaving money on the table at today's prices. I assume Fiat has teams of people working all day to figure these questions out themselves. (Although bdelp makes several good arguments above for not diluting the brand.)

Yes Yes Yes. I bet (and I might be wrong) 75% of F-car and Lambo owners would be aghast and appalled that a $35,000 car can keep up with them and in skilled hands leave them as road-kill. (that 75% is of course conjecture, but I bet it's pretty high)

Of course there are 2 ways of looking at this. I appreciate the exponential amount of effort and technology truly required for these incremental gains. ie: Getting to 180mph is 'easy' now a days but 40mph more takes double the effort. -- But few buyers are -truthfully- paying 8X or 10X more money for a 20% bump in performance. It is, as you say, all about perception.

 

I don't have the stats at hand (I will in 3-4 weeks), but the income distribution in the United States has skewed somewhat over the last decade.

The rich (e.g., financial services sector) are quite a bit richer, and the middle class is relatively smaller. Ironically you could argue it was the financial services sector that helped reduce the wealth of the middle- and lower-income segments by destroying others' wealth and collecting commissions.

If Ferrari are simply charging what the market will bear, that would explain the price rises for the entry level new car (458). 4X the average American wage may account for the same number of potential Ferrari buyers as 2x the average did in the '80s.

 

I'm interested...What cars were really "better" than say a 1987 Euro 328 back in 1987? I think that, back in the day, the 328 was considered an excellent performer. The reality is that virtually EVERYTHING is better now - athletes (sans Michael Jordan, of course); medicine; all technology, etc., etc...

The only thing a car manufacturer could really do to create "monster performance" back then was to stick a blower on a car (or increase displacement), hence the 288 and F40, pursuant to turbos. I suppose that Ferrari really could have done this with the standard 308 QVs and 328s...or even the TR, and maybe they should have. But they didn't and really didn't have to; no other car manufacturer was doing anything demonstrably better than Ferrari performance-wise at this time, so I think it's safe to assume that Ferrari was on the technical cutting edge for the time. Innovating?...Not so much but, until, the NSX, not getting left behind, either.

Nowadays, virtually EVERY automaker has a "monster", and there are tiny, esoteric companies, such as Pagani and Koenigsegg, that really push the envelope, so Ferrari had better innovate and overcome if they want to keep being recognized as, perhaps, the ultimate sports car manufacturer.

It is the pursuit of ever-more-advanced technology by virtually every car-maker that has driven up the relative price on not only F-cars but on virtually all high-end autos. What do you think is going to cost more...a Sherman Tank or an M-1 Abrams?

I, for one, and I know this is concurred by a good number of F-chatters, wish that Ferrari would stop making such gigantic, ponderous cars; they are all too friggin' heavy! If Ferrari were to make a truly stipped down Lotus Elise-inspred car with say a V-6 or V-8, say 350 HP and, accordingly, weighing approximately 2000 pounds, it would not only sell like hotcakes for the true enthusiast, but it could also be priced for the "upper middle class". That being said, it doesn't mean they would have to make a boatload of them; they could still keep the cars exclusive simply by limiting the number built. On the other hand, the car would not have to be aimed at the upper middle class; it could still be aimed at the true upper class, for a car like this would be in incredibly high demand for the true driving enthusiast. At this price-point, Ferrari could manufacture the car in carbon fiber or all alluminum, or a combination thereof, and maybe, just maybe, they would bring back the gated shifter ;-)

 

And anunakki, if I can throw one more curve ball at you, the whole premise of your question is flawed.

You're basing your cost to income numbers on the American market only. But of course this is a global company. To really run these numbers you'd have to look at incomes worldwide or at least in developed nations.

Did I give you enough to think about tonight? lol