Why has Ferrari abandoned the upper middle class ?

They've moved their technology to the top of the heap. I don't think the 3X8 cars were technological marvels at the time. I can tell you from personal experience the Dino is no more sophisticated than the Porsches of the same era.

So perhaps, cost is a factor.

But, I think the answer lies in a careful assessment of their potential market segment. The last 15 years they've pushed their prices hard, probing for the point of resistance. I think they're close, and they know it.

They don't want to push into the next price point, for fear of losing more than they gain. Lose 20% of the units, even with a significant price increase, and they under utilize their facilities, costing them profits.

I'm sure there are several bean counters at Fiat who crunch the hell out of the numbers.

I think it would be interesting to look at profit margin per car then and now, I just have no idea where to get the numbers.

D

 

Porsche is arguably ahead of or equal to Ferrari.

IIRC, Automobile ran a recent article that put the 997 GT2 RS ahead of the 599 GTO in performance. And rumor has it the Porsche voluntarily started with the engine in the wrong place. Regardless, I don't think the Italians have out-tech'ed the Germans or Japanese.

With respect to the Dino, Porsche introduced fuel injection in '73. Ferrari didn't come around till 1980, and when they did it was a disaster. So, I agree with you on the older Ferraris not being tech marvels. Just not sure Ferrari has created any kind of lead that would explain their price increases.

 

this is correct. i was surprised to hear donv say ferrari is better today and better positioned when compared to the competition than it was in the 3x8 era.

that is simply not true...ferrari is not at all better positioned in fact...maybe worse when comparing performance price dependant.

porsches best would mop up a 3x8 back in the 80's while costing less. the same applies today.

 

the answer as it applies to incomes vs. prices and the increasing gap...

median income does not rise in step w/ cpi nor inflation. i will chime in again when the discussion departs from jerry's initial question/point.

pcb

 

Speaking as a relative new owner of a Ferrari after many years of E-type ownership I think the real story here is the stagnation of so called "average" middle income. Government statistics here in Canada recently showed that relative to inflation, the average middle income earner has seen no increase in their income in the last 30 years ! So much for "trickle down economics" I enjoy maintaining my own vehicles and have always bought used so the price of a new Ferrari is really not a big factor for me. Happy motoring, JGW

 

My thinking is that historically Ferraris have been toys for the very rich. The 250 Lusso, 275 GTB, Daytona, Boxer, etc sold for roughly the price of a starter home in a nice suburb of Los Angeles in their day. In other words, the buyers were not middle class.

The Dino and 3x8 series were an experiment in a lower cost product. What they had to offer was style and passion. Yes, a Porsche 911 was faster around a race track, but there was little or no sense of occasion in driving them and, sorry you Porsche lovers, they sounded like enraged Volkswagens. They were cars you bought as daily drivers, not for those special afternoons or evenings. Indeed, in Los Angeles Porsches have always been as common as dirt and don't set you apart from the masses.

It seems to me that buyers are now so fixated on HP and top speed numbers that Ferrari has been forced to return to it's traditional customer because they cannot compete in the less expensive market. With cars like the BMW M3 out there, it seems that a car has to offer more than just great performance to justify even a $100K price.

It's probably better that only the very rich are now buying new Ferraris. From what I have read they are so dependent on electronics that their values will tank as soon as they are out of warranty. The tech guy for the Roundel BMW club magazine says only a BMW technician should own a 7 series that is out of warranty. How much more so for a 458?
Probably best the buyer can take a 50 percent depreciation hit in 3-5 years like most cars suffer and not lose any sleep over it.

 

The middle class is so gross..they even smell poor. They should appreciate that they can see Ferraris for free.

 

Don't know how many remember here but back in 1985 the currency exchange was 2300 Lire to the dollar. I know this first hand because I bought a BB in Ancona for $20,000 in May of 1985. Today with the stronger Euro Ferrari has to price their cars at a higher point to make a reasonable margin.

I think Ferrari could sell more cars if they had their product development and marketing on the same page. With their brand-spanking new assembly lines they can now produce 12000 cars per year. But let's take a look at what they are selling. 612s.....out of production, 599s.....slow sellers and basically done until the new intro in 2012. That leaves the bread and butter...the 8s. With 458s the demand is there. But I don't think Ferrari can produce enough body shells at Scaglietti in Modena to fill the production line in Maranello. That leaves the Cali to fill in a huge part of their product to sell.

The Cali is a fun and great car to drive even if many don't like the styling. It really is an everyday Ferrari. But Ferrari dealers, FNA or even Ferrari SPA have never had to reach out to the market to sell cars since the intro of the 355. But now they do. The typical Ferrari buyer wants the latest, greatest and fastest.......the 458. But to sell the Cali Ferrari must reach out to a new profile. This is unchartered territory for a firm that had long waiting lists.

To sum it up I don't think this is about over pricing for the market. It really comes down to having the right product and being able to market it properly to an expanded demographic. If they were destined to keep production in the 3-5k range that would not be an issue. But they have heavily invested to scale up to 10k plus. Uncharted waters for the Maranello firm. Especially in a crowded market and mediocre economy.

 

I have personal experience in this-- I owned an 86 Mondial 3.2 and an 85 911 at the same time. I still have the 911... but take a look at any of the car magazine comparison tests from that era, and I think you'll see what I mean.

Similarly, take a look at the car magazine comparison tests from today. Now, maybe the California is not actually the best example, but I would stand by my statement that, on absolute performance and driving qualities, the 458 and the 599 (and even the 612) are some of the best cars on the road today.

 

Agreed.

 

You're kidding, right?

I recall being told, around 2003/2004, that Ferrari Dealers had a markup of $25,000 on F360s. I'm not positive, but I recall MSRP being around $175,000. So FNA/SpA (I have NO idea what the split was, if any, between the two) netted $150,000. Assuming, as a SWAG, that Ferrari's cost of goods sold percentage was, maybe, 65%? Ferrari's gross margin per car was, say, $50,000?

I'm probably off somewhat; but, bottom line, Ferrari's profit in 2003/2004 has to be a LOT more than in 1986 when they were selling 328s.

But, seriously, I don't understand the point of this thread. (I must be getting old.) Ferrari was pulling back the cushions and searching for spare change just as hard in 1986 as they were in 2004. In fact, probably, harder. Go back and look at the volume levels. Without even checking, I doubt Ferrari sold much over 750 cars in 1986. I forget what year they broke 5,000, but it was around 2004/2005.

Said another way, completely different times. Not only was the world a different place, but Ferrari's market demographics were not even close. For example, everyone needs to keep in mind that the F360 was a perfect storm. The initial MSRP in 1999 was $139,999. It was a cool looking car, and does anyone want to guess how many people on Wall Street got 7-figure bonuses in 1999? It was the right car, at the right time, and at the right place. Ferrari has never been the same since.

Dale

 

Actually, that was the plan when Fiat moved Maserati under Ferrari. It was simple: Ferrari > $200k. Maser > $100K.

But then Fiat decided to move Maserati back under (or over?) Fiat and Alfa. The idea was to clean up Ferrari's balance sheet to do an IPO, but eventually that idea got lost.

Frankly, I think you have been dealing too much with the Chinese. In Italy, bidness is merely a state of mind. The problem is no one can seem to remember which state! After all, when the PM got caught flicking his bic, he is outraged when people think he paid for sex. I HAVE NEVER PAID FOR SEX!

Dale

 

Ah, therein lies the rub. Whut's a poor boy to do? I love Porsches, I really do. But when it comes to driving, there aint nuthin like the real thang.

Driving F430s at Mt. Tremblant was almost more fun than the law allows.

Dale

 

It actually might. Real world cost of buying a Ferrari 458 Italia new is about $330k, so tack on an extra 20% and now you have something more like $400k, and their GT's would equivalently be priced in the $600k price league. In that range, you could conceivably start thinking about the Bugatti Veyron as a competitor. I mean there are examples of companies that have gone the route of completely excluding not only upper middle class, but also low multi millionaires. Take Bugatti for instance. They build 50 cars/year and lose money on every one. Not the best business model.

Also, keep in mind, a lot of people who can actually afford these cars don't care about cars. In my building, there are only a handful of Ferrari owners out of maybe 200 people, all of whom could readily buy a Ferrari if they wanted to. So maybe 3 out of 200 people who can afford one actually want one. Then take into consideration there are only around 95000 "ultra-high-net-worth" individuals according to wiki's sources, so that makes what, 1425 possible sales of new Ferraris TOTAL in the world if they start targetting solely the extremely wealthy. Most of the rest own some form of Mercedes, handful of Bentleys, and almost no Rolls Royces (negative stigma in this area). That's probably not the best way to go if Ferrari actually wants to turn a profit. It's also a negative hit for the brand if spotting a Ferrari on the road is as rare as spotting a Bugatti Veyron. Personally I've never seen a Veyron on road aside from car shows, etc. The masses will cease dreaming about getting a Ferrari one day, and instead dream of buying a Lamborghini, since a Ferrari at higher price leagues is about as reasonable a buy as a Veyron.

 

I can totally see this having happened. It actually makes sense. The California looks dead-on like a baby Maser GT.

I recall that a similar instance happened with Porsche many years back. The 924 was supposed to be an Audi (developed by Porsche), but Audi declined the car in the last stages (they were too cash poor at the time or ???), so Porsche just re-badged it & marketed it as a Porsche for the masses.

 

No it doesn't. The California was the first in the new look for Ferrari. Just look at the headlights, the grill, and the details. The are carried forward in the 458 and now the FF and for sure will be in the new 599.

It looks nothing like a Maserati at all.

 

Like Diane Keaton & Woody Allen in "Play It Again, Sam."...


Therapist: How often do you two have sex?"

Diane: ALL THE TIME! Like three times a week."

(his visit)

Therapist: How often do you two have sex?"

Woody: HARDLY EVER! Like only three times a week."


It's all about perception.

 

Statistically speaking, a person has a greater chance of going to prison than owning a Ferrari in their lifetime...but they have a greater chance of owning a Ferrari then being placed on death row. (Actual information!)

People all want to have something that is exclusive. First they want easy access to it so THEY can get theirs, then they want that item to remain exclusive once THEY have theirs.

Too many people want whatever will make others envious of them.

 

The ironic part to this story is that Enzo actually hated the fact that, after the sale to Fiat, "his" cars were becoming status symbols for the rich.

During Enzo's time, his cars were expensive and he was particular about to whom he would sell, but that was not so much about "exclusivity" as it was about him making sure that his potential customer would actually use the car as intended and support the brand. Recall that, early on, many of the Ferraris that were entered into races were privately owned, not company owned. The more Ferraris to enter a race, the better the statistical odds of a Ferrari winning. So having that support was vitally important to Enzo and the Ferrari brand.

But, by 1969, after being humiliated and nearly bankrupted by his rivalry with Ford, and amid slipping sales, Enzo really had no choice but to sell to Fiat. It was really only after Fiat took over the passenger car side of the business that this emphasis on perceived exclusivity and the resulting "status of owning a Ferrari" became the driver of the brand. Of course, performance was (and has remained) an important characteristic, too.

 

The things that look "Ferrari" are those easily added to a design. The basic shape owes a lot to current Masers.

 

Interesting reading, cheers mate.

 

Fortunately, Ferrari really is not the same independent small company it used to be. They can now look at things from whole Fiat Group perspective.

So, a middle class Ferrari is still here but it happens to be called Maserati GranTurismo. Stretching one brand does not work, working with multiple brands does.

So, it is the same succesfull concept as when 500k BMW is called Rolls Royce and 20k BMW being called Mini.