812 Market Dynamics

The trend over de last 50 years is that production has been growing continuously, yes a few misses...but the rest was big plusses year on year...irrespective if Enzo, Luca, who knows who were running the company.

At the same time...our wealth in the 'western part of the world' has increased...more people can afford a Ferrari...

And then emerging markets have created new blood...people who want to buy and own Ferraris...and have money to do so.

Off course you supply them to whoever wants them. And it is good...cars maintain 'accessible', lots of great models being released! The brand is stronger than ever. No one is selling out! The cars have never been faster, better, more profitable for Ferrari as today. They are still in F1!

I observe with admiration...

 

Production will be concurrent but the bulk of 812 orders will be for existing customers with coupes already, wanting a spider. Those will need to be satisfied so it is likely production will be around 4:1 in favour of GTS once it gets going. Just a guess though.

Lots of 812 delays, including mine and more famously The Car Guys’ car also. Mine was supposed to be Jan, then March, then May, July and finally October. It’s just gone into build (for which I feel grateful, then a bit silly for feeling grateful given how much it will cost, but mostly still grateful - Ferrari eh?)

 

Even though I agree with the basic premise of your statement, I totally disagree with your blame on Wall Street. The greed was on part of the private owners of Ferrari who removed Luca and brought in Sergio. Also, the management does not need to follow a strategy of producing more cars, they can remain a smaller high margin business but they choose to set a strategy of growth to attain a higher share price. Wall Street does not magically make up numbers and tell the management to produce that. Wall Street works off of the guidance provided by the management and its strategy and calibrates its projections accordingly. I could have potentially agreed with your comment if there was an activist investor involved but that is not the case here. I would lay the blame with the management post Luca and the Exor group and not wall street.

 

^This

 

At the VIP launch in 2017 I asked for an allocation. Placed a deposit soon after, did TM in March 2018. Some of the other regular customers from my dealer got theirs at the turn of the year but I think there were some difficulties for a short period mid-year. I have the feeling that the new regulations and change to 2020 MY brought some complexities, could be wrong about that though. My build was admittedly a complicated one. 300-350 in the UK currently seems about right.

 

There must be something in this. But when you look back over Ferrari history, the valuable cars are the best ones, with their value being influenced also by volume. It’s hard to see the bad periods of Ferrari in the past in the value of the cars they produced during those periods - for example the company was in trouble on numerous occasions. The 348 was developed/designed in a very difficult period for the company, pre Luca, but they also built the 288 GTO and F40 around that time. That’s not to say that short term owners didn’t suffer through, they did. But long term buyers, buying for the right reasons (the cars) should still be able to buy great cars to hold and enjoy for a long period of time, at reasonable net cost. If you change and flip quickly life does now get more difficult.

 

Goes without saying that they wouldn't be beholden to WS greed had Sergio regime not gone that direction. But they did, and now the rest is unfortunately predictable. Companies with management making quarter-to-quarter decisions to please the Street's greed always look to suck out every penny. Does that seem consistent with what Ferrari has historically been about? Do you think Ferrari (as a company and as a brand) would have achieved what they did, had previous management been about sucking out every penny? (...to please Wall Street) That is what Wall Street is all about, so Ferrari have no choice but go down that path. I base this statement on having gone through two IPO's during my career, and seeing first hand how the businesses (are forced to) change post-IPO. Ferrari now going down that same path. Incidentally, neither existed as a standalone entity within 5-7 years of IPO, both having been trapped/forced into profit-driven mergers.

 

As soon as you said TM we all knew why the delays, so random the timing when go down that path,

 

There are a few delivery miles registered 812 around at dealers with a big discount from owners wanting out (40 to 50 k off) . If they delayed your car, maybe worth, if you can get out of the order, getting a new car bargain. Good spec too the last one sold by Joe Macari . Over production, too many new models and market saturation. Ferrari probably don't worry their new car orders are saturated, but dealer network is overloaded and cannot afford to take in the exchanges. For UK best thing Ferrari can do is stop all 812 coupe production orders and switch to GTS volumes. Not helped by political uncertainty , but the issues will get worse across the range if volumes in the market are not reduced. Or Ferrari will become the champion of new car depreciation all time records as well as performance car design. Owner panic has set it too, plus people wanting out before their GTS comes. One of the greatest cars ever produced by Ferrari but nobody wants a used one right now. To think a year ago premiums were still being paid.

Best solution, advised to me by a wonderful car guy. "I have no idea what you mean by depreciation, I never sell them just buy them and drive them "

 

No panic here. Saw the GTS and even more in love with my ‘19 coupe now, minus gas filter worries. And, I’m a spider lover/owner to boot! Just not this one..

 

I unfortunately think your last point is well worth considering further. The European motor industry is littered with merger cases and there is no doubt this could be highly likely for Ferrari. For example, the German motor industry loves to do this - VW with Audi, Skoda, Porsche, Lamborghini etc. Mercedes have not really done this, preferring instead to co-found projects like Smart and widen their own model range - the notable exception being their merger/takeover of Chrysler which ended unsuccessfully. They are also direct competitors in F1 and so I have the feeling that they wouldn’t do it. Which leaves BMW. They took over the remnants of the main British manufacturer and have kept Mini and Rolls Royce, building both into successful brands once again - you could conclude they like the concept. There have long been talks (and I recall now announced) of a deal to find a way to provide scale battery/EV powertrains for their future production, meaning that they could be among the type of owner that could release value from Ferrari who are committed to ICE. It would give them a super-brand, a presence in F1 again that rivals Mercedes and widens their portfolio in a very successful way. This is in no way a prediction and no doubt there are many reasons why this is not a good idea, unknown to us. But it perhaps serves as an example of why Ferrari might be appealing at the right price to an owner.

Whether any of us would still feel the same about a Ferrari owned in future by someone else depends, I suppose, on who that someone is.

 

Nail, head.

 

Taking your point one step further... Both post-IPO mergers that I referenced resulted from lackluster share performance 5-7 years out, as a result of certain factors not materializing as forecast. A few quarters of missed earnings, rating reductions from analysts, then the stock hit new lows, resulting in takeover vulnerability.

There is more than a handful of us long-term Ferrari die-hard faithful who have already indicated that we henceforth will not buy new Ferrari cars - for a number of reasons. As the overproduction trend continues, more get burned on rapid depreciation and quit buying new cars. Sales take a hit, and eventually that is reflected in the numbers. A few quarters of missed earnings, then.............. (!!)

All entirely within realm of possibility. Your point on BMW is an interesting one indeed.

 

Slightly off topic, but if ferrari has to merge, I don’t see a path where Aston survives also.

 

Another view to add to the mix, what would Ferrari/Lambo and the others look and feel like when they are 100 percent electric power, and without the heart and beat of the IC ? All of them play on that aspect today as the essential ingredient for their product, when that is normalised, and no longer is part of the emotional ownership experience, will they still have the same appeal ? Yes they will be fast, hyper fast, but will they lose some of the brand essence. Max the share price now and sell off whilst it is at the peak ? I admire some of the current electric cars, blown away by performance, but I don't love them in any way. Younger generations may of course have a totally different perspective.

 

No way market will be that HIGH next Summer in UK and 300/320 is dreaming, you can get anything with 1000 miles plus for 290

 

Ferrari far too expensive at current multiples to be taken out

 

Just wait until they miss a few quarters of earnings. That will all change. tick tock tick tock

 

That’s true but it is not difficult to imagine a scenario where the price has fallen to a level that makes sense to someone in a few years. Not predicting it but it is possible.

 

For sure as long as brand translates to new world and decline of ICE and not the next Kodak.

 

People dropping like flies around me, cancer etc. Just got to try to enjoy eh.