Ferrari Waiting Lists - WHY?

Limit supply and you create an artificially high demand which raises prices. This is what Harley-Davidson did/ does. This doesn't mean build 50,000 fcars a year, but a little more supply will even it out.

 

Exactly.

 

They are at total capacity now, it isn't like OPEC turning the well RPMs down, they can only make so many and the custom colors always bog it down........a red/tan, I think "no problem"........



"Purple metallic to match my eyeliner, with yellow calipers and um......." well they NEED to wait in line! LOL!

 

As the dollar tanks higher prices are a 'given', without any moves by Ferrari.........

 

Everyone wants the newest Ferrari, but Ferrari cannot meet demand.

So.........................you have to wait in line to get your new Ferrari.

 

Its a long story, but I'll try to be short.

Until the 360 came along, the "Dino" Ferraris (i.e., the V8 cars) were not exactly flying off the showroom floor, particularly the 348s. This was not a good time to be a Ferrari dealer. Think about it. You sell, what, maybe 2 to 3 cars a month?

Then came the 360 Modena, which was a perfect storm. Not only was it a the "cheap Ferrari," it was a great sports car that blew the doors off anything that anybody else had. Also, 1999 was a very good year for a lot of dot.com and Wall Street types. So you had the motive (the car) and the means (the dough) and suddenly Ferrari dealers had a major hit on their hands.

And then, the 360 Spider came out. Great Balls of Fire! We have a winner. Suddenly, buyers were willing to pay $100k to $200k OVER sticker! Dealers were screwed, however, because they had an informal agreement with FNA to sell at sticker. If they sold at sticker, the dealers were making $30k a car, while the private brokers were making $75K and up a car.

To put a lid on this, dealers created "waiting lists" consisting of their loyal customers who had brought cars back in the dark ages.

And then, the dealers started playing games. Let's say that Dealer B needed a 360 spider. Dealer A would sell one to Loyal Customer 1 at sticker, say, $180K. Loyal Customer 1 would then sell to Dealer B for, oh, $230k. Dealer B would then sell this same car to "Hot to Trot" for $280k. (Now, I would never accuse Loyal Customer 1 of splitting the profits with Dealer 1, but I have heard other people say this. )

Finally, last year, FNA got smart and said dealers could use "market pricing." Thus, waiting lists, to the extent that they ever existed, are a thing of the past. If you have the dough, and your brow is sweating for that F430 Spider, Son, you just brought yourself a car.

There's more, but I'm tried of typing.

Dale

 

Don't forget that you're talking about Italians. I don't say this in a mean way, but the Italians don't exactly subscribe to the Havard MBA view of the world.

Just to give one example. Luca and Fiat had a great plan going when they moved Maserati to Ferrari. Ferrari needed production capacity, and Maser had excess capacity enough to build 10,000 cars. Plus, it would give the dealers more product to sell, i.e., crack lite .

Everything went great, until FNA decided to overprice the new Maseratis. Did I say overprice? I meant gouge people. A car that should have stickered at $80k and sold for $70k, was priced at $95k and ended up selling for $65k.

Then the powers to be at Fiat decided to take Ferrari public so they stripped it of Maserati. And then the powers to be at Fiat decided not to take Ferrari public and to move Maserati under Alfa. And then the wife of some big wig caught him with his mistresses, again, and everybody forgot about everything. Ah, La Dolce Vida.

I'll just say this. There never had been waiting lists. Each dealer had his long-time loyal customers that he could count on to buy his allocation. While some folks may have heard that there was a waiting list, indeed some folks actually put money down on said waiting list, I'll bet you a dollar to a hole in a donut that none of these people ever saw the waiting list.

Dale

 

Interesting article about the strategy of waiting lists.
http://www.ferrariownersclub.co.uk/happenings/2007/october/brand_dilution/report.asp

 

Ferrari is doing something that is very rare in this age of business, they are looking at the long term rather than just the short term profits.

 

+1

 

Isn't Maserati still part of Alfa? Or is it back with Ferrari?

 

Sounds like a Microeconomics class in here. Can we get some graphs to validate this all??? Producer surplus was transferred to more of a consumer surplus. I love the thoughts. Everyone has some valid points. Thanks

 

How close is Ferrari S.p.A. to making the majority of profits from licensed merchandise rather than vehicle sales? Are they there already? If so, it gives more credence to building/maintaining the mystic of the brand versus selling more vehicles at a marginal short term increase in profits.

 

Another tactic ferrari could use is to raise the msrp way up, to correspond to the market price...the problem with this would be the ferrari would have an msrp way above the competing brands...eg, a 430 spider would have a msrp of 300$k, but the gallardo spider would be 220k...this wouldnt look too good during the magazine and car shows comparison tests..." lambo keeps up with ferrari but costs 80k less"....

 

I looked all over for this. Either I could not find it (entirely possible) or it's not public, since Ferrari is noit itself a public company and. in addition, the rules for public companies (Fiat) are different in the EU. This is the closest I got was the following.
=======================
FOR 3Q2007
=======================

In amongst the detail of the Fiat Auto Group Quarter 3 2007 results is a small paragraph of how Ferrari fared, and they seem to have done very well with improved sales and higher profit. Having got rid of Maserati some time ago and with significantly increased production output the company made a profit of 15.2% of sales in Q3. Here is the full text of the paragraph concerning Ferrari:

Ferrari had revenues of €368 million in Q3 2007. The 10.8% increase from Q3 2006 is attributable to sales of the 599 GTB Fiorano model and the F430 model, the Spider version in particular. In the period, a total of 1,428 units were delivered to the sales network (+8.8%); sales to end customers were 1,535 units (+12%).

Ferrari closed Q3 2007 with a trading profit of €56 million, up 47.4% from Q3 2006. This positive performance is mainly attributable to higher sales volumes and cost efficiencies.
The F430 Scuderia, a special series model derived from the F430, was presented at the Frankfurt Motor Show. This high-performance two-seater berlinetta demonstrates how Ferrari's Formula 1 know-how is carried across to its car production and is aimed specifically at Ferrari's most passionate and sports-driving oriented clients.

In the first nine months of 2007 Ferrari had revenues of €1,172 million, an increase of 12.9% from the same period of last year. Deliveries to dealers totalled 4,675 units (+15.1%); sales to end customers were 4,899 units (+13%).

Ferrari had a trading profit of €157 million, an improvement of 53.9% over the first nine months of 2006.

Ferrari just closed its Formula 1 season, winning both the constructor’s series and the driver’s championship for the 15th time.
============================
FOR 2006
============================

Ferrari have issued the following statement:

"Maranello, 19th February 2007 - The Ferrari S.p.A. Board of Directors, chaired by Luca di Montezemolo, met today to review the balance sheet for the financial year ended 31st December 2006.
Ferrari's three main areas of business - road cars, competition cars and brand development - yielded a significant increase in revenues from Euro 1,289 million in 2005 to Euro 1,447 million in 2006, a leap of 12.2% due in great part to brilliant sales of the F430 and the 612 Scaglietti as well as the immediate success of the new 599 GTB Fiorano which was unveiled only at the start of last summer. .

Ferrari's trading profit of Euro 183 million showed a significant leap of 16.4% over the previous financial year and can be attributed principally to the rise in sales revenues and to efficiency gains which were partially offset by increased investment in research and development.

Ferrari recorded a positive net financial position also, with a balance of Euro 213 million, a dramatic improvement on 2005's figure of Euro 13 million.

Deliveries of road cars (i.e. non-track cars) to their owners stood at 5,671, 4.8% up on 2005. Impressive sales in North America and Switzerland (+6%), Germany (+8%), and new or developing markets, such as the Middle East and Asia Pacific area (+15%), all made important contributions to this improvement. In all 121 Ferraris - almost double the figure of 2005 - were delivered in China where there is now a 12-strong dealership network spread across the most important areas of the country.

A total of Euro 232 million was assigned for Investments and Research and Development (not including Formula 1). This is a 6% increase on 2005 and the equivalent of 16% of the company's turnover. The investments concerned, amongst other matters, the new 599 GTB Fiorano and the development of future models.

Last but not least, Ferrari's brand development activities continued to yield double figure growth, rising an impressive 23% in 2006's turnover, thanks both to the granting of new licensing contracts and the expansion of its retail programme (there are now a total of 13 Ferrari Shops and Stores throughout the world).

After the Board Meeting, Ferrari President Luca di Montezemolo declared: "I am particularly satisfied that the company has grown significantly once again, underscoring the importance of the Ferrari brand to the Fiat Group in the very year that the latter bought back the Ferrari shares that had been sold to the banks. These results and those to come from a company which has the benefit of a new corporate structure, with Jean Todt as CEO and Amedeo Felisa as General Manager, confirm and will continue to confirm the quality of work done at Maranello."

Montezemolo also acknowledged the invaluable contribution made by Michael Schumacher in his 11 years as a Ferrari driver and declared himself confident of the results that both Massa and Raikkonen will deliver this season.

 

Ferrari has be very successful with their strategy over the years. I wonder if the same strategy will work in the future.

 

Ferrari will contue with this strategy for sure. Why to change winning formula? Best.

 

This is an interesting thread. I remember the market of the early 90s. There were several issues with the 348. One was it looked like a miniature TR, also the US economically was not in the best position to the point that there was a big rebate to sell 93 348s. Then along comes the F355. I remember how the magazines went crazy for the F355. It was like the rebirth of the V8 Ferrari. When I decided to buy my first F355. I went to my then local dealer and looked at the colors. There were no real options in 1995 for the F355. I ordered my 1996 F355 coupe in the color I wanted and my dealer got it for me in no time at all.

For the 360 Modena the market went crazy. My deal asked me if I wanted to order one. I was totally unsure so I said no not right now. By the time I decided I did want one the wait was 4 to 5 yrs and my dealer wouldn't even take my order. So I asked to be put on the list for the replacement of the 360. My dealer informed me they did not know how they were going to handle that as I was one of many people saying the same thing.

Fast forward to now and F430 and I go to visit my now local dealer and I am told I have to build a relationship with them and buy several used Ferraris and then may be just may be I will be able to purchase a new Ferrari in the distant future. The replacement to the F430 I have been told will only be sold to people trading in a F430 and there will be no list. I can't even ask to order that car.

Now if you consider what is happening with the 599. The market is even crazier.

It does seem to be the simple supply and demand curve. Raise prices to the point that the list disappears or at least is not too long. It has been said that if the market prices for F430s coupe and spider are 38 to 48% higher than MSRP, then Ferrari should raise the prices to some point that they still have some kind of waiting list.

If you are Ferrari Spa, you would be happy demand is so high. I don't really think Ferrari really worries about prices compared to other competitors like Porsche's Turbo or Lamborghini and does any of us really care if Lambo is 80K cheaper. I looked at the Lambo and first I can buy it at a discount and shortly after I own it it is already 80K lower than the F430.

What I don't like is the idea that Ferrari dealers now won't even take orders for future cars and I have to buy several used cars over the next several years and then may be I can buy a new Ferrari. For me it seems to be a frustrating process.

Just my few pennies
Thanks