Ferrari and its 'identity crisis'

Forget about going to the mall and shopping for more clothes.
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That picture says it all...

Many car makers will still let you have a manual transmission.

That's a huge thing, to a driver.

Not a modern F1 driver, a real world driver....

 

High end car manufacturers, not just Ferrari but Aston, Porsche, Bugatti (who have their own menswear stores) and others have been talking about being luxury brands not car brands for a long time. In a sense that's true in that the margin on a 991 Turbo S is even greater than that on a Hublot watch, and these manufacturers are purveyors of specialist goods which their target market (us) will pay a premium for.
The margins on luxury goods of the type they would like to focus on are significant.
But the challenge for all of them is brand stretch. I'd maybe love to own a Veyron but I'm not going to be shopping at the Bugatti store across the park from me, because I know what cars to buy and I know what clothes to buy. Premium luxury consumers (us) are generally discerning, which is why we are premium luxury consumers.
I can't think of a car company that has succeeded with this philosophy yet, apart perhaps from Porsche Design which succeeded, in a small way, because it was founded and initially run under completely different management to the cars.
Can anyone?
Maybe Ferrari will do it; if anyone can make luxury work, it's the Italians, and now they have the French on their board which is the killer combo.

 

Today's world is totally different than when Enzo controlled the factory. He sold road cars to finance his racing. That was a glorious time. The early times with the P4, 250 GTO race car on the street, good and bad Ferrari F1 cars.

 

I recall there was a thread awhile back discussing the Ferrari trinkets and such and that these were poor quality privately labeled items.

 

I wear the same thing everyday: Wifebeater, Silk shirt, Medallion.
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I was thinking about this... and what Luca mentioned in his speech at Stanford was something to the extent "we sell the dream".

Who wears a Ferrari hat? Guys who closely follow F1 and guys who are car guys.. specifically Ferrari owners and guys who want to be a Ferrari owner. BMW guys always have something with the little "M" logo on it. Was it on the show "Friends" in the 90's that Joey hung out by a Porsche in front of the building and people asked him if it was his. He started wearing Porsche clothing because "The only people that wear Porsche clothes are people that own a Porsche". I didn't own a Ferrari t-shirt until I got mine.

To what extent does wearing the Cavallino on clothing represent that dream? Otherwise it's just a misshaped Ford Mustang icon isn't it.

 

I don't understand the merchandising even though I get it is profitable. I received a Ferrari hat as a gift a ways back - still haven't worn it. Maybe its just me but the car speaks for itself and the brand doesn't need me to advertise for them.

 

Its like when you go golfing and everyone has a Masters shirt, hat etc.. or Ping or what ever. or you wear your favorite sports team.

I think its the deep psychological need to belong to a group. and by belonging bringing meaning and value to your self.... that my best attempt at Freud.. but when you have a powerful symbol... Prancing horse, Stars & Strips, Swastika, Crescent moon, etc... it draws people in. that is the root of clan and family belonging.

So while you think its marketing, it does say a lot more about you than you think. frankly in todays world what ever you wear from undies to ties and shoes etc.. says a lot about you ... whether you want it to or not. you can shop at Walmart or Gucci... you are making statement one way or the other.... people don't always get the message you are sending ... but you are sending one.

 

Well...to me, it depends on which french they have...
I won't lecture anyone on luxury brands, and especially not you; but to the casual observer that I am, Hermes is still luxury; Gucci and Vuitton, not anymore. Too many products in too large numbers, it is now much too common to be considered "luxury".
Hermes is still family controlled, production runs are limited, waiting lists are long, and the products are rare and very expensive, which, in a way is the definition of luxury.
Gucci and Vuitton are dime-a-dozen, and almost everywhere in the world, produced in large, unlimited series: not what I call luxury.
Take also brands that are almost unknown anywhere, except by the "cognoscenti" ("those who know"), like Goyard for luggage: what they sell is unavailable anywhere else, not made by any other than them, and the waiting lists are what they decide these will be...that's luxury.
But that is perhaps not what Ferrari aims to achieve?

Rgds

 

Outside of the US there are no waiting lists for none limited edition cars.

 

Well you are somewhat accurate. Liberal societies break everything down into pieces so the 'individual' is the crowning achievement of modern society. Individualism is however completely nihilistic and anti-social. America because of it's enlightenment origins, is the society most obsessed with the worship of the individual.

Since people naturally want to belong to some group, but at the same time liberalism negates any sort of collective identity, something has to step in to fill the void. What you get, especially in the United States is the forming of pseudo-communities around a particular corporate brand. In the US any organic ethnic or religious identity is quickly replaced with one a corporation happily provides, for a 'price' of course. Capitalism demands anything of cultural value be commodified with a monetary figure attached to it. One of the tenants of liberal capitalism is the idea that 'progress and growth' have no limits.

So you get Nascar dads, ferraristas, sport worship etc. All of this has one thing in common, it requires the purchase of something to join. Identity in a liberal society is purchased in the market like everything else.

Ferrari now being a public company must grow it's EPS by any and every means possible.

 

Porsche going back to manuals for the 991.2 GT3 says a lot.

 

Sergio is about making money for Ferraris shareholders. Current Ferrari owners must be happy that he hasn't brought out a less expensive Ferrari (Dino?) because that would increase sales immediately. Look at what the boxster did for Porsche. You don't think Sergio is thinking about this? Look at Apple. They just brought out a less expensive phone to compete with the other brands.

Now you bring up diluting the brand and endangering the sales of the current Ferraris. Right now Ferrari is using the "exclusivety" as its calling card. Right now Ferraris are sought after by the well heeled customer regardless of the quality of the car. Everyone knows that there are better built cars.

My point: people will still buy the upper end Ferraris because they offer an exclusive experience. Real or faux enthusiasts, celebs, people with $ will always want the "upper crest" cars. Skip the trinkets/luxury angle and offer a lower priced Ferrari. Price it around $150K.

 

The only thing Ferrari did wrong was go public. What makes Ferrari (and its brand) special is the high price and the car being rare (exclusive).

So if you are the CEO and you now have a Board of Stockholders that want increased profits- what are you going to do? Sell out like Maserati and start punching out cars that are now a dime a dozen - well there goes the exclusive experience? Are you going to raise the price even more - and produce less cars and not utilize all the assets currently owned by Ferrari?

The shirts, hats, socks and underwear are just ancillary products. I am sure they are high margin and very profitable, but I would not buy the stock based on this.

Ferrari should have never gone public as it is just not designed to have strong growth and ever increasing returns to a shareholder.

 

Actually, LDeM was speaking along the lines of Former FNA CEO Gian Luigi Buitoni and his thesis on Marketing, which Ferrari has been attempting to follow for many years now.

Selling Dreams: How to Make Any Product Irresistible: Gian Luigi Longinotti-Buitoni, Kip Longinotti-Buitoni: 9780684850191: Amazon.com: Books

I agree with this. Providing a return to shareholders will likely require more sales, cheaper production and a broader product range. This is the exact antithesis of "selling the dream"....very limited production, extremely high quality and very high price of their core product.

Until this dichotomy is resolved, Ferrari stock will be an unattractive investment.

The hats, shirts and the like are merely marketing tools and nothing to invest in and are simply capitalizing on the historical and aspirational aspect of the company.

 

Seriously! We need to be more guarded with our ideas

 

That's over 10M in La Ferrari's right?

 

I've bought a new Ferrari F1 team hat the last 4 years because I am into the sport full on now. Funny thing is, Santander has the prime spot on the front and the team logo is relegated to the sides. People always ask me if I work for Banco de Satander but I tell them they are a sponsor for SF. People don't ask soccer fans if they work for Emirates do they? I guess the hat is more tricky because I can't get away with jersey's under the skylight in my room at work.

Maserati is in a different spot now to me. I think their move recently coincided with a design breakthrough where the Trident mark and "fish mouth" grill just nailed it and really defined a new generation. The GT is the best looking. QP looks a little bulky but's that's a side effect of the "more door" type.

I can't wait for the Alfa Giulia but I'm afraid after my recent build and maintenance on my boosted Miata, I will have to wait. Hopefully I can score a nice one "certified" in a year or two. And I might just have a good winter heating set up for the driveway so I can keep the 348 in the garage at home and save on storage

 

I'm not sure if Ferrari had any choice in the matter. FIAT who basically still owns the majority of Ferrari through Exor, and Angelli family, needed the money and Ferrari was the way to unlock the cash.

as for Maserati being special? no, I don't think so. it was only special because it was relatively rare, but they usually competed or tried to - with Mercedes and BMW... so when you look at the production on Maserati its still much less than those two.

The problem is that Ferrari is really the only Italian Car mfg that has any kind of Positive reputation... and has been able to grow... while outside of Italy Fiat is about the only other well known brand. Lamborghini prior to Audi VW as a shambles ...

As Gucci found out in the mid 80's ... increasing production does not lead to increased profits... and it almost bankrupted the company... and also they lost much of the cachet that the gained in the 50's-70's. it was absorbed by a large conglomerate... and perhaps that is what Marchionne wants to have happen with Ferrari. sell it to LMH... or something like that.

I agree a car business that tries to expand into other areas that its not known for is not wise. the only way is to focus on the history of Ferrari, and the Man... as I set out before on this thread.

 

Why do all the people with no Ferrari have negative stuff to say?

 

+1 - More on this - Ferrari Stuck on the Grid - Bloomberg Gadfly

 

Hermes is a bag for women, bought by both women and men. It's a very high mark item. Ferrari is a hand made car with a lesser mark, that costs far more than a bag per item, and that is harder to trade on the used market. The two brands have nothing in common except that similar people might buy both.

Whoever came up with this parallel is a fool. Same for the IPO IMO.