Why has Ferrari abandoned the upper middle class ?

Judge nailed it... Ferrari as limited resources by which to produce cars, and as such, should focus their resources on selling the producible cars for the maximum profit possible.

There is another side to it as well... the brand is valuable largely because of the exclusivity. If that exclusivity is compromised because "everyone can afford one", then the brand loses it's luster, and it becomes harder to sell that $300k Ferrari.

Just like GM has a hard time selling Corvettes at >$100k, similarly, if Ferrari came out with a $100k (or whatever) car, they would probably sell a lot. But then they do what every company making cheaper versions does... they start to add resemblance and features to make the cheaper one look more like the nicer one. Essentially, they cannibalize sales of the higher end model in favor of the lower end one.

And over time, the sales of the higher end models dry up. Then it becomes a lot harder to sell the higher end one because your perception of value has dropped. People no longer think of you as a $300k car maker, but a $100k car maker.

It takes years to build up a brand and years to destroy it. The short-term benefit gained from cannibalizing the brand is not good business, IMO.

 

Might be interesting to ask the question another way. If a 328 sold for $60's in 1986 and now sells for $40's in 2011.... how does that compare with a California or a 360 if you look at depreciation? Is Ferrari jacking-up the price on new cars, only to lose more value for long-term owners?

 

The main reason for depreciation has been the economy the last 3 years. It's not because of over production. It's because fewer people can afford them and a lot of people have been selling them.

The desire to own one is still just as strong as it's always been.

Also, look at 328 prices after 348's came out. They dropped significantly. I can tell you in the 80's you could get a Dino for 12 or 13 thousand dollars. Everyone wanted a 308 and few wanted a Dino. Now, what is the price of a Dino today? They made twice as many Dino's as they did 328's so you can't say it's because of over production for the $130K difference.

You really can't look at devaluation the way you're thinking. It all depends on were in time you're standing before you can understand an object's value.

 

Until last summer I really never paid too much attention to Ferrari-though I always kinda liked the 3X8 series. Last summer I visited Honolulu with my wife and happened across the Ferrari store in Waikiki. My lasting impression is pretty much this: 'a Chinese made shirt that says Ferrari on it for $60.00...wow...'. I'm not considering a 3X8 any less, but to me Ferrari isn't quite what I think a lot of people believe it is. At least the Ducati shirts I've bought were made in Europe (Greece/England/Italy).

Rick

 

IMHO, feel free to bash porsches... my Boxster at 52k miles is a POS compared to my 928, besides... every tom and harry has one. ;-)

 

There has been a shift in EVERYTHING luxury, and in our perception of what is luxury.

People will spend much more on hobbies than they used to. As mentioned here already, Ferrari is pricing its cars in a relative sense where they were in the 70s - although now there are cars priced well ABOVE what a Ferrari costs (Bugatti for instance). But Porsche built the CGT and now GT2-RS, Ford the GT, Corvette the ZR1, etc. I think the pricing is right in line with what people are willing to spend. In the 70s, people were not willing to spend as much on luxury.

Look at bicycles. In 2000, I built myself a completely custom mountain bike, and spent 4k, which was dubbed insane. At the time, an entry level mountain bike - one that would really hold up - was about $500. Top end off-the-shelf bikes were 3k, max. Now, all the big manufacturers have off-the-shelf bikes that push $10,000. You can easily spend that much on a road bike, or more. When you look at comparisons of "typical" bikes in a cycling magazine, the prices will be 4-9k, and this just considered "normal" by today's standards.

What's interesting is that an entry level bike is still $500, only it is worlds beyond what the same price bought 10 years ago.

Same with cars, or any other segment of commerce. You can buy a new Ford Fiesta for $13,500 (about the same as a top-of-the-line road bike). But you get antilock brakes, stability, air bags, and reliability way way beyond cars of 20 years ago, and not in the same league as something from the 70s.

Also, I would say that "poor" is not what it used to be. People in America who truly have to worry about a roof and food are few and far between. Cell phones and flat screens are not luxuries, they are considered necessities.

It's an entirely new mindset.

To me, Ferrari is not for the middle class. I want them to build cars that are leading edge, and that means they will be unattainable for me. But I would rather they build them and price them as they are than dumb them down and cheapen them up for me. It wouldn't be the same thing.

BTW, I cannot afford a new Ferrari, but I currently own 5 cars, plus a dedicated race car, and will have yet another toy car this spring. This is WAY beyond anything I would have dreamed of as a kid, and makes it a little hard to complain about....

 

... a man's reach should exceed his grasp,
or what's a Heaven for?

Veblen blah blah blah.



I think Ferrari left tons of new car money on the table in the recent boom years - we all saw the US dealers scrambling to capture that profit.

I think they have a very effective strategy. The upper middle class can have hats, shirts, coffee table books and used cars. With a stretch, a splurge, maybe a new 8 cylinder car. They take factory tours in a bus and are told not to touch anything.

The proper, desired clienti owns several Ferraris, Classiches happily, Challenges if inclined to the piste, certainly ateliers, XXs if he can, and so on.

I think it's working.

 

The dead.....

 

I'll give you one reason: because, in comparison to it's competitors, the 328 was not nearly as good a car as the California is.

Right now, Ferrari is making awesome products. Cars which really are the best in the world at what they do.

That was not the case in the 328 era.

Even if you want to defend the 328 as being way better than the 911 Carrera of it's day, that was not the perception then. The perception was that the 3x8 cars were beautiful, but quirky, unreliable, and underperforming. That isn't the perception of the California today.

 

Perfect. LOL.

 

"What it is is a change in Ferraris mentality to be the cost no object best it can be."


I think that's a bit of a romantic view of things, though LdM certainly has taken things in the right direction.

 

Is it that or is it really trying to be true to using race car like technology in their cars to be the best performing cars on the road.

I kinda laugh when I hear they are so "high tech" to attract wealthy buyers. If there were doing that, then why would their radios, speakers, entertainment interfaces, and GPS, and key fobs/alarms be so bloody poor for a car of this price? Even GM has better stuff in that department.

 

I think we are saying the same thing. They add all this stuff to be closer to racing technology -- not just fancy gadgets just to raise the price because "they can".

I imagine that the accessories and options though are excellent margin winners for them. Some of the prices of the simplest CF pieces are ridiculous. CF relates to racing (and to beauty) therefore -- people want it and will pay handsomely for it.

 

I never will. I love all my 911's, my CGT and my 356. Porsche is outstanding quality for a great price.

I don't believe that Ferrari is making the best in the world at what they do. They make imho a fantastic product but in the end other manufacturers are doing outstanding things and for less money.

Ferrari has a target audience and it isn't the guy looking for straight forward performance. If so people would buy the new Mclaren (cheaper than a 458), Corvette ZR1 or buy the Porsche 911GT2 at 75k less than a equally equipped 458. The GT2 smokes the 458 and the 911 body style is so race proven it is raced almost more than any other car in the world except Mazda's.

If I were Fiat I wouldn't change a thing. In a horrid economy they are still selling their cars and they are still selling at a nice tidy profit. I'd keep pricing as high as possible as long as possible. Leave it up to the customers if it's too much. So far in 50 years it's proven to work pretty damn good for them.

 

It is front engined?

(No - I don't really have an answer.)

 

Historically speaking, that is not accurate, Mitch. And, while I respect Enzo for what he accomplished in his lifetime, an honest review exposes the fact that not everything Enzo touched turned to gold.

Yes, in this recent recession, Ferrari's sales remained strong on a relative basis. However, in the 1960s, many have argued that Enzo's focus on racing and "neglect" of his passenger cars resulted in poor sales. From '68-'69, Ferrari sales dropped by @15%. The company was in a very precarious financial position and eventually Enzo, for better or worse, sold a large stake of the company to Fiat in 1969. Frankly, Enzo had few choices but to sell. The company was not financially sound and, to remain viable, needed a massive investment to modernize design and production.

Even after Fiat took over, Ferrari has not been immune from the problems that every other automobile manufacturer has faced from time to time. In the 1980s, under Fiat's management, Ferrari reached peak sales of @4,400 cars in 1991. However, by 1993, Ferrari sales fell to only @2,300 cars. A nominal -50% drop sales in just two years.

So, respectfully, it would be a mistake for us to assume that this recent sales phenomenon is the "rule" rather than the exception or that Ferrari is immune to the fickle vagaries of global economics, internal corporate politics, competition and sales trends.

 

Agreed. 911 Turbo Cab is positioned more like a GT car.

 

I think how you try to answer this question depends on what time you're referring to in Ferrari history.

For sure, they built the original cars for the rich only. Cars costing over $10 grand in the late 50's and early sixties was just crazy. Enzo cared little about who gave him the money as long as he could go racing. The more money they would pay for the few cars leaving his little factory, the better.

The Dino was the first attempt to bring down costs and use Fiat's mass production capability. It was an attempt to go after the 911, which is more of a middle class market than Ferrari's V-12 cars. But, by calling it a Dino, the idea was not to delute a "true Ferrari" and keep their prices higher for their richer clients. In effect, the Dino was for the middle class and Ferrari for the upper.

The 308 was designed to be a Doctor's car. It again introduced more mass production and more daily driving capability, along with lower operating costs and greater reliability over the Dino. The 308/328 is certainly the most "middle class" of all cars built in the Enzo era.

Since then, car prices have risen but so has performance. But also so has production-- so they must be doing something right.

And, perhaps, returning to it's roots.

 

In a crash most likely..