"Will Ferrari's Growth Dilute Its Brand?"

Great article, thanks for posting. I love this:

The Globe and Mail's photographer is politely warned by Ferrari's PR lady not to take long-view pictures of dozens of cars under assembly. "We don't want to give the idea of massive production," she says.

Indeed, mass-produced cars cannot be "exclusive" cars. Ferrari wants to give the impression the speed machines are crafted by artisans in a space that is closer in spirit to atelier than factory. For Ferrari, it's all about protecting and building the brand.

And especially this:

But Sergio Marchionne, Fiat's Italian-Canadian CEO, happens to be a Ferrari lover and seems unlikely to tamper with the brand as long as Ferrari's financial performance continues to improve...

Mr. Marchionne owns three Ferraris, drives them to work and is in line for a F430 Scuderia.

Fiat's CEO is in line for a Ferrari. LOL!!!!

 

Great article. I think most of what is said is bang on except this:

"Ferrari dealers say Woodbridge, Ont., just north of Toronto, may have the highest per capita concentration of Ferraris in North America, perhaps the world, thanks to a healthy supply of wealthy people of Italian descent and open roads."

I've never heard this and would find it interesting to have it verified.

 

I think the key is "MAY HAVE"

 

heard there are 500,000 italians in that area. from an italian that lives there. they sure have more fiat 500's up there than down here.

 

i think ferrari can increase their production without diluting their brand as long as the increased production is sold to BRIC, since this obviously won't decrease ferrari's exclusivity in London for example. The normal westerner will still see the same amount of ferraris per day.

i am surprised they are going downmarket with an alleged 2+2 convertible hardtop. New 599s are trading as high as 500k i think. and while i understand ferrari is managing their brand by allowing the prices to sky rocket (as opposed to them simply selling the 599 for 500k), since premium creates "cache" among the status conscious, a notorious and familiar characteristic of new money, i think they could take a different tact to increase revenue.

how about creating 3 seperate models (all 600hp plus) that all sell for around the same price, say 400K. one is mid-engined, the other front engined 2 seater, and lastly a 2+2. Some may buy all 3 which would increase ferrari's exclusivity since there would be more ferraris spread among less owners. So there would be no entry level ferrari at all. I think this would increase revenue while maintaining exclusivity.

 

`

Monaco may have the highest.

 

Ferraris still fetch HUGE premiums, even used ones.




Lamborghini is the one struggling in this department.



In short, no, the brand will not be diluted.

 

It's more likely to be diluted by theme parks and crap products made under license. The fastest way to dilute your premium brand is to make sure every yob has a key chain, drinks cooler, sweatshirt and tote bag with your logo on it.


Jack

 

Are Lambo sales weak?

 

They may be reaching a breaking point however. Consider all this:

1) Apparently a 20% price increase for '08.

2) F will more than double production with the intro of the California GT.

3) New cars will be purchased under a F leasing program or they will be placing a one year lien on the car even for an outright purchase.(apparently this is the case on the 430S)

4) The USD seems to be weakening daily. F would be wise to allocate supply to countries where they can make more money thus possibly limiting US supply i.e. more frustrated customers on a wait list.

5) Dealers now charging market pricing on the cars vs. MSRP even with some longer term customers.

How far can they push things until smart money(all relative when purchasing a luxury, status symbol like this ) says enough? Maybe all this just doesn't matter to the guy who's got the cash ready to buy??

 

So that's where they all went

I can respect that. The Exec's aren't eating up all the good cars, they have to stand in line just like the customers. That's a company that is customer driven, not a bunch of greedy Execs taking everything they can and robbing their customers. See, that's what is missing these days in a lot of companies, proper customer service.

 

No, I meant the used department is weak for sellers. Sorry.



You can get an '05 Gallardo for under $150k. You can't get an '05 F430 for under $200k.

 

I think you're right. It is a myth that people who own F-cars can buy any car that costs any amount of money; that they are so wealthy, money means nothing to them. This isn't reality. $300k excludes a lot more people than does $200k.


Eventually, like the article said and like you suggested, buyers might go elsewhere.

 

I remember reading an article about a year ago where LdM answered this type of question and said they are well aware of the brand and the increased pruduction will only go to "new" markets, not exiting markets like the US. So existing countries/buyers would not have to worry about having more cars than buyers.

 

Well, the market might be weakER for Gallardos than for F430s, but from what I understand the market for Gallardos is pretty brisk compared to other exotics with good turnover and fresh inventory. A MY '05 Gallardo is now 2-3 years old depending on build date, only $25-50k (16%-25%) in depreciation in 2-3 years for any car pushing $200k is actually quite good.

My point is that it's not fair to say Lambo is struggling or weak because it is not matching outrageous success for Ferrari, while it is still beating the curve. How much is an '05 Porsche GT2 selling for? '05 Aston? '05 Bentley?

 

I suggest we do market research to see if that many F's are there. Just park on the open road and count; it shouldn't take that long.

 

Ah! I am happy to know I am in such good company, but it raises a couple of questions.

If he is in line, what position in line does he have? Did he get to jump a couple of spots? Or conversely, does Fiat's quarterly performance adjust his placement? (Sorry. Didn't meet sales targets. Down you go...) How about reliability? (Sorry. Another recall. Give the Scuderia back.)

I'm working through operating plans and goals for next year, so this idea just gets me grinning.....

 

You can make numbers tell you whatever you want them to. Remember the old adage 'figures can lie, because liars can figure...'?

Yes, when I lived there, there were a whole lot of Ferraris in Woodbridge (and Unionville, and Goodwood - other suburbs of Toronto). How you measure the 'per capita concentration' is wholly subjective, and can be tailored to suit.

So... Relax, Orange County... Remain relaxed, Carmel, CA... Continue tanning, Palm Springs... You can all make valid-esque claims to the 'Highest Per Capita' title.

Verification, on the other hand, is another story.

 

I have a question for the board to toss around:

When the current generation (Super Sweet 16, MTV Cribs, Whips, etc.) gets into their prime and has more money to spend. What cars will they buy? I predict Lamborghini will have huge growth compared to Ferrari. Not many in that age group watch F1 or care at all about "race history/prestige" like the current generation does... They just want things that are as flashy as possible. (gag) Ferrari will always be a powerful name, but I think Lamborghini and others will invade more and more into their market.

 

By the writer's logic then, South Philly should be crawling with Ferraris. - Not to mention the wealthy Main Line, but the last I looked, I didn't see any ferraris, Dino Dave notwithstanding.

 

I think that you are on to something there. There are such kids around here who don't even know what a Ferrari is and I'm not making that up.

It has happened more than once that kids (tennage) have asked what kind of car is this? - whats that?

Personally, I doubt many of them will ever buy more than a toyota, but I still believe that you have hit on something.

 

I don't know how that is any different from my generation (I went to high school in the 80s). The Countach was THE hot car then, and no one knew about F1 either. And we had MTV too!

Lamborghini's problems are two-fold: 1) The idea of having a "look at me" car seems awesome in high school but much less appealing when you get older than 21, and 2) while the cars look outrageous, the driving experience-- ergonomics, visibility, reliability, AND performance-- has not been up to Ferrari's standard. Maybe #2 is changing now, with Audi's ownership, but I was just reading a review of the Gallardo Superleggera in Car and Driver, and they were comparing it unfavorably to the F430 in just those areas.

I personally think dilution of the brand is a real problem for Ferrari. At least they're aware of it. I think they had the right solution when they owned Maserati and could get growth from that while using Ferrari as a "halo" brand, but apparently that did not work for whatever reason.

That said, as long as they keep the new production headed to new markets, it probably won't make a difference.

 

+1. I like almost all exotic cars, but now that high school is done (well, a couple of decades ago, come to think of it...) I'd feel like a dysfunctional attention whore driving any of the Countach-Diablo-Murci. The Gallardo is a little tamer - more like a giant Audi TT, big wings and scoops - so that one wouldn't be as embarrassing.

I also agree that it made sense to have Maserati be Ferrari's volume marque. It would give them ample cars to sell, while keeping the Ferrari name more exclusive. Plus, Maser has a stunning new car now. It's as through Ferrari got Maser out of intensive care and didn't reap the long-term benefits.

 

They got the new V8 out of it.