One thing learned about Ferrari going public

Nothing insulting in your post and I cant argue with it. Racing was Enzo's life and the brand was built off the results of racing. I learned that through FChat.

I just think the brand is now 'self sufficient'.

Im going to use an analogy in the industry Im in. Pop Culture.

Spiderman, Batman, Comic Book Superheroes in general, are everywhere. Very popular. Yet, no one is buying comic books. Sales are at all time lows but the public still loves the characters and flocks to see them in all forms...except how they originated. Comics.

Ferrari, IMO, is going the same way. More and more people love Ferrari but have no idea of its history. That will only grow.

Im not putting down racing or implying Ferrari should stop. Just saying its becoming more and more unimportant to car sales.

 

Well they used to say racing improves the breed. I dont doubt that ferraris racing experience and resultant engineering know how is a big part of what seperates a ferrari car from say a lamborghini. Its just that ferrari goes that little bit further in so many minute details, things important to racing but to many irrelevant in road car.

Not sure that in terms of infusing road cars with cred or real ability F1 is the best venue, but that is a seperate story.

The F1 racing certainly sells the chochkis and apprently that is a major profit center.

Could the car company survive without the racing, sure, lambo does, and bently still looks back to lemans in 192something. But without a racing core in its engineering principles the product would suffer even more than it already has.

 

from a branding perspective... using RACE as a ticker symbol is weak and gives the impression being pedestrian... while race is obviously part of what they do, it does not infuse or convey any of the standing of luxury that the brand has achieved...

 

The one thing we learned is that superdave won the lottery and has billionaires friends?

 

RACE

Many don't understand Sergio The Bean Counter's choice over FRRI

It's pretty simple. You just have to understand him. RACE really stand for

Raise All Cash Eternally

 

Maybe he's just a tad racist?

 

Better get over it. I don't like the trend either, but I think it's somewhat inevitable. Humans haven't changed, but the technology has gotten so much better, it's basically gone beyond human capabilities. For example, I watched a car show on the Esquire channel yesterday, where the guys drove a 488GTB. The guy probably never heard of heel-and-toe and was obviously not much of a driver. However, the car covered up most of that.

Ferrari has been painting themselves into a corner for the last 20 years or so, as the entire market moved upscale on grunt and performance. Now, with computers and endless horsepower, there's really nowhere for the market to go now. What surprises me is that other manufacturers haven't out-Ferrari-ed Ferrari on styling. Doesn't cost more $$$ to design a car people would want vs. a rolling piece of crap.

A big diff between comic book characters(in above post) vs. cars is that MARVEL and crowd can distribute via movies and the web vs. old paper comic books. Comic books were the distribution medium, not the content(not to mention a very fragile medium. I collected Marvel comic books when I was a kid and the condition never improves with age, it just gets worse). With Ferrari, the cars are the content. When the content blows, everything else around it crumbles.

This is why in the next 10-20 years, I think Ferrari will become much less relevant than today. Can't differentiate their product very much from the other guys, compared to the past.

Wait until Wall Street beats Ferrari mgmt. into submission, with endless rounds of cut-corners-to-cut-costs and whatya done THIS quarter to jack up the stock price. Does anyone really think the cars(and owners) aren't gonna suffer? HA!

 

Ferrari is a conspicuous consumption brand. Here people buy the new expensive car, they don't really want the baggage of some dead guys and forgotten races. Talking "provenance" is simply masturbation and does not elevate value.

I think at some point they will have to either whore out the name or make cars that are affordable. We are experienced with the Isuzu Impulse "tuned by Lotus" and the Mclaren Mustang. I do expect some desperate product attempts that will be used under new management to raise capital.

Owners are long used to Enzo himself giving them the finger to support his racing habit. Yet another indignity.

 

Ferrari customers may or may not care if the company races but it's racing that motivates the company. End it and you'll drain much of the passion and the pride that fuels those responsible for designing and producing the cars.

 

Yawn

 

The reason Ferrari is the #1 go to for the conspicious consumption crowd is the racing successes. If not for that there would be no legitimacy to its brand.

You guys are right about Wall Street and this is probably why LDM resisted this move.

I think this move works in the short run, but in the long run I have my doubts. I think it makes it much harder (not impossible) for Ferrari to be Ferrari. Maybe somehow it gets better, but I am skeptical.

One of the problems that Ferrari will soon find themselves dealing with- any company that wants to have a luxury multiple will have to show growth. How do you show growth when you are capping your volume at 10k units. You can either increase volume or price. If the market is looking for 30% year over year growth, this becomes a very difficult achievement when you lock down volume.

Aside from brand image, one reason why they can't go much above 10k units is tougher environmental regulations at higher volumes.

So I suspect the market will eventually change the multiple it applies to Ferrari. It will probably be higher than your typical automakers but perhaps not in the same area as other luxury good suppliers.

Of course this will take years to play out and by then SM will be long gone....

 

Thanks Howie for your post.

I Agree 100% I need to calm down in regards to my discourse with Super_Dave, my aggressive line had to do more with historical interactions between him, myself and other members here....I've publically apologized to him and the Andrew (moderator) and hope he returns.

I'll leave it at that

As for racing and Ferrari, I think there are three separate and distinct questions.

1) Will Ferrari leave racing behind now that they are public and investor demands focus on profits over sport?

As with many others here - I think this is an open possibility, although I would lament it - I do agree it can happen!

2) Is Ferrari racing based history already lost (today not in the future)?

I simply cannot understand how anybody can say Ferrari is distinct now from racing and/or racing is now not part of its ethos. I know that's what started this contentious exchange, but I respectfully ask if you if you can provide context. Do you mean as in outside Formula 1, as in they no longer race in other organizations?

3)Will leaving racing behind (especially Formula 1) hurt Ferrari's brand?

Again, I think this is a non-sequitur

I've given this analogy before, but I very much see it similar to if Nike decided to stop being involved in sporting events. I argue this would hurt the brand (and sales) tremendously. It would relegate them to a much smaller market mind share similar to Fila and Sketchers.

Case in point, take Lamborghini (Modena), Aston Martin, Bugatti, Caterham, and Maserati. All those companies are very accomplished in making some iconic cars, and have F1 histories they have long since abandoned. I argue though that having an absent F1 presence, limits their overall brand presence. It makes moving merchandise and perpetuating the 'legend/dream/aspirational' component a difficult proposition to the millions of prospective 'customers' (not just cars of course) the world over.

 

In "the old days" Enzo would make street cars so he could RACE

Today Ferrari RACES so it can get cheap TV advertisement paid for by others (sponsors, Concorde agreement money) to sell it's expensive cars and over priced merchandise.

The accountant-turned-CEO Sergio should have made the moniker BUXS because that's all its about today... getting more bucks.

 

Jerry completely agree that Ferrari maybe be able to grow beyond its current branding. Furthermore, they can morph into something very different, exactly like the example you gave - Lamborghini or say Bugatti.

Nobody knows the future, and I completely agree that in the *future* this is an open possibility, Ferrari may become more "Porsche' like - making SUVs and Sedans.

This point is distinct from the original premise:

Ferrari is *already* divorced from it's racing heritage now.

Do you believe as Ferrari stands (today) that the brand is already distinct and separate from F1? As in the millions (yes millions) of Formula 1 Ferrari fans have no equity for Ferrari?

That they would not feel disenfranchised if Ferrari would leave F1? They would continue to support the company as a car maker *only* and continue to purchase hats, jackets, shoes, toys, at the same rate or higher than say Koenigsegg?

I completely believe you and have no doubt in your circle that the Ferrari owners have no interesting in racing or F1 - I've found quite the contrary in my experiences however, not that everybody has an interest, but I would say the majority do.

**

As for the heated exchange, if you have the time - take a look at historical exchanges between the parties in this post as well as others to give you more context...Suffice it to say, it will give a good background on the escalation - that being said - I've apologized to Super_Dave and hope he comes back soon.

Cheers

 

What next? Ferrari(Fiat) to build an OHV push rod V8 like Toyota to sell more cars and trucks in a relevent market. Yeah call it the Ferrari 350V8 motor. Got to get those unit sales numbers up. The F car inspired sport ute, 1/2 ton PU truck, delivery van. Rosso Corso of course. Optional daytona seats,CF accents, real leather,Seating for 9 people, TQ converter autos, automatic brakes, lane change warnings, Buzzers/bells/sirens to keep you awake while you are "driving"?
God I sound old. I can and know what heel and toe means. My left knee is still my own but has been worked over 6 X and they wanted to replace it 20 yrs ago. Forgive me but I LIKE not having to use my clutch leg except for balance support.
Still I'd rather be dead than drive a buick or minivan..........
GTS Bruce

 

Completely agree, but then again - Porsche has 2 SUVs and a Sedan (with another I hear in development)..it can happen to Ferrari...let's hope not!

Bruce, do you think Ferrari is divorced and distinct from racing *today*?

 

Ferrari is afar far way from making an suv or even 4 door car.

lest not forget lambo made a great suv back in the day.

Fearris buinbsess is 3 things.

Racing.

Chochkis sales

Cars.

Chochkis sell off the back of racing, and as many here have said the road cars draw their inspiration, and mechanical/performance excelence from being a racing company.
F1 racing is the ferrari story, and to the extent there is a huge premium of ferrari products, certainly the chockis its pretty much all from the racing.

As tot he future, proche sells how many 2 door sprtscars in 1 year?

Ferrari has a long lon long way to go potentialy before they need to think of sedans and suvs.

Back to the immediate present. For various reasons they cant or wont go above 10K units, although a seperate Dino brand can push that up further. Its also pretty clear that other than new model year launches ferrari cant necessailry even sell the current 7k cars per year now.

Therefore to grow sales a sub Dino brand living off ferrari halo is agreta way to go. Also they will offer more derivation off existing platforms, look how many flavors of 911s there are.

I dont see this as all bad. IMO ferrari being bought by fiat back in the day must have seemed far worse, FIAT was a mass brand known for cheap crap, yet we ended up with arguably great cars.

 

Bruce, couldn't agree more!

Just wanted to get your $0.02...do you think the Ferrari brand is *today* divorced from from racing? Furthermore, if Ferrari were to leave racing (F1) do you think this would have a negative effect on the brand, say Chochkis sales?

These are rhetorical questions to me, but wanted to get your take.

Cheers

 

Dream on. Racing is just marketing to today's Ferrari. It's TV advertising paid for by others. Ferrari is ONLY in the business of racing in the same way that GM is in the business of making TV commercials for the Super Bowl.

My feeling is if Sergio could find a cheaper way to promote Ferrari, he'd dump F1 tomorrow.

That's what bean counters do.

 

mikelfrance,

Thanks for your comments, I will not argue that F1 is very much the marketing/advertising arm to Ferrari the same way (fill in the athlete/sport) is for Nike.

You may also be 100% correct that F1 may be dumped in the future.

The question that seems to elude me from multiple folks in this thread is this:

Do you feel that F1's importance to Ferrari as it stands *today* is irrelevant? If so please provide context as in why?

Appreciate your thoughts.

 

Chochkis sales would slide at an ever increasing rate without the racing. They would also stabilise at a certain point due to the back catalogue of racing sucess, are these sales not the major revenue stream for ferrari?.

In the end Bently and Lotus have tried chockis sales, without the race fanclub the serious volume sales dont work.

The road cars ironicaly could probably be divorced from racing, there is enough of a back catalogue there to give them a decade or more of cred, and other series besides F1 may be betetr suited. But Imo with enough time being divorced from racing would make the cars even more mass mainstream than they are already. I dont think vette sales rely on racing and vette sales are what 4X ferrari per year, off the back of essentialy one car which come in multiple versions.

My guess is ferrari future road sales sucess is multiple versions of each of its models and maybe a dino.

The racing I speculate is a profit centre for ferrari, not counting the halo effect and free advertising of the brand it engenders..

But then if it were all about the racing then Mclaren road cars should be far more sucessful than they have hitherto been, and lambos wouldnt sell at all..

Perhaps a bigger question is should ferrari be in F1 to the exclusion of other series and could ferrari step out of F1 win elsewhere, what would this effect be on the brand.

Imo a serious racing effort in say Gt3 Gt4 would lead to better road cars.

 

You need a different Ferrari if you are not feeling any passion or pride when you drive. IMO

 

Thanks for your thoughts Bruce, very thoughtful. I agree that without any racing the brand would suffer from:

lower product licensing
lower halo effect
lower free advertising
lower public perception

According to the latest prospectus, 31% of Ferrari Revenue comes outside the cars
Source:
https://www.sec.gov/Archives/edgar/data/1648416/000164841615000004/newbusinessnetherlands.htm

 

agreed, perhaps Testshot is part of the business end of it?

Why the boredom and lethargy?

 

I know more than a few owners who really enjoy attending the races as ferrari's "Guests".
There's a real marketing benefit there.