Team Ferrari
Posted on May 9, 2013
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Ferrari has decided to cut production of its high-performance road cars by at least 4% this year, despite an increase in sales, as the Italian luxury car manufacturer seeks to preserve the exclusivity of its brand.

In 2012, Ferrari sold 7,318 cars but chairman Luca di Montezemolo said the company would look to reduce that figure to below 7,000 vehicles while still aiming to increase profits.

Despite the global economic outlook remaining uncertain, Ferrari has seen a growth in revenue of 4% to 551m euros (£433m) in the first quarter of this year. Net profit was 54.7m euros (£46.3m).

Ferrari continues to provide a vital contribution to owner Fiat. On 1,798 cars sold in the first quarter of this year, Ferrari made 80m euros (£68m) before interest and tax. That compares to 603m euros (£511m) on sales of about one million vehicles by Fiat.

The idea behind the move is to protect the resale value of the company’s cars. Ferrari’s entry-level California model costs around 185,000 euros (£157,000) in Italy, rising to 272,000 euros (£230,000) for the top of the range 12-cylinder F12.

The Italian company cut production in 2003 for similar reasons.

Montezemolo said: “The strength not to listen to people who say ‘your competitors will benefit from this’ is a choice I learned from Enzo Ferrari, who used foresight in enhancing the value of the brand.

“The exclusivity of Ferrari is fundamental for the value of our products. We made the decision to make fewer cars because otherwise we risk injecting too many cars on the market.”

Montezemolo added that Ferrari’s engine business, which suppliers motors to Maserati, will help keep revenues on track.

The brand continues to do well away from the road car business, with the company earning 52m euros (£44m) in revenue from 60 merchandising licences of Ferrari-branded clothing, watches and other items.

Montezemolo said: “Ninety-five branded items are sold every minute around the world.”

In tandem with the cut in production, Ferrari plans to invest 100m euros (£85m) over the next two years on improvements at its Maranello factory, where 3,000 people work on building 32 cars a day.

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Ferrari to cut production of road cars to protect exclusivity of brand
88 Responses

  1.   1. Posted By: Peter Bakalor
        Date: May 9th, 2013 @ 12:27 am 

    Guess we’ll all just have to buy Maseratis instead.

    [Reply]

    hero_was_senna Reply:

    Have you seen the new Ghibli… :D

    [Reply]

    Doobs Reply:

    Lambo for me.. ;)

    [Reply]

    Oz Geezza Reply:

    Lambo,DNA goes back to a Tractor, better
    believe it,same for Aston Martin.
    David Brown Tractors,thus the DB.

    Equin0x Reply:

    Lambo’s are a farce, glorified VW’s, even the components are the same, like interiors and electronics, plus the R8 and Gallardo are basically the same cars with a different skin, Ferrari and Mclaren are the real true kings of supercars even Porsche has joined the lifeless VW circle.

    Kbdavies Reply:

    Lambo “DNA” does not go back to a tractor. It’s like saying Saab DNA goes back to fighter jets, or Porsche’s dna goes back to a Volkswagen Beetle or German Tank!

    Lamborghini commisioned an ex Ferrari engineer to build his first automobile engine, and an ex Maserati engineer to build the chassis. The cars and tractors have as much in commons as both having 4 wheels and driven by a human being.


  2.   2. Posted By: Duffy
        Date: May 9th, 2013 @ 12:45 am 

    here’s a link to the article on YAHOO, very interesting reading!
    http://autos.yahoo.com/blogs/motoramic/ferrari-cuts-production-2013-vows-never-build-electric-130344501.html

    [Reply]

    Dai Dactic Reply:

    Interesting article!

    “Ferrari is like a beautiful woman,” Di Montezemolo said. “You must desire her, you must wait for her.”

    So I’m wondering – does Ariel Castro have any Italian supercars hidden at his Cleveland home?

    Maybe the ‘woman as owned object’ implication in the quote is inappropriate in the 21st century.

    [Reply]

    Richard Reply:

    What a silly mix of two completely different topics.

    I’ve studied feminism, have absolutely no problem with any cultural liberalism or equality, and certainly find the current news pretty abhorrent.

    But to suggest Luca is anything other than passionate about the brand he’s worked so hard for over the past 40 years (he joined Ferrari from Fiat in 1973) is just plain boring. Can we talk about F1 and cars please?

    [Reply]

    Dai Dactic Reply:

    ‘F1 and cars’ might be a ‘hermetically sealed environment’ for some but for others it carries multiple associations.

    If my view was ‘just plain boring’ I’m surprised that you were inspired to reply to it.

    Many thanks!


  3.   3. Posted By: Sebee
        Date: May 9th, 2013 @ 12:48 am 

    Wow hero, isn’t this what we were just talking about a bit? New cars not being special? )

    If you copy and paste this headline into Google Translate PR translator option it probably comes out…”Ferrari sales slow as 1% ers no longer wish to flash their wealth in modern austerity times.”

    [Reply]

    CTP Reply:

    100% agreed. Way to spin a slow sales day.

    [Reply]

    petes Reply:

    +++

    [Reply]

    hero_was_senna Reply:

    Obviously LdM reads JAonF1 ;)

    [Reply]


  4.   4. Posted By: DB4Tim
        Date: May 9th, 2013 @ 12:51 am 

    Dam-it …and I have been saving for sixty years…..it will take a bit more now!

    [Reply]

    Joel Reply:

    DB4Tim, I understand your comment was in jest. Just wanted to point out that supercars like Ferrari won’t sell a call to a customer just because he/she can afford it. They usually have a “qualifying criteria” that you need to meet (not accounting the money you have in the pocket).
    There are times they would even suggest that you need to buy a used one before being offered a brand new one. That’s what I read somewhere :)

    [Reply]

    Rich B Reply:

    that’s only true for the hypercars like the enzo or laferrari. anyone can buy a 458 if they have the cash.

    [Reply]

    Equin0x Reply:

    true but even the F12 has criterias.

    F458 Reply:

    Your talking about an ultra exclusive car like a LaFerrari where they invite you to buy one. For something like a 458 or california if you have the readies you can go buy anytime.

    [Reply]


  5.   5. Posted By: Sebee
        Date: May 9th, 2013 @ 12:54 am 

    Wow hero, isn’t this what we were just talking about a bit? New cars not being so special? )

    If you copy and paste this headline into Google Translate PR translator option it probably comes out…”Ferrari sales slow as 1% ers no longer wish to flash their wealth in modern austerity times.”

    [Reply]


  6.   6. Posted By: DaveZ
        Date: May 9th, 2013 @ 1:18 am 

    If they want the brand to be “exclusive” don’t put the pony on teddy bears.

    [Reply]

    Doobs Reply:

    Mercedes and even BMWs used to be pretty exclusive, now even my dog’s got one…

    [Reply]

    Kbdavies Reply:

    Not a Z1, or a Z8….both are still pretty exclusive and quite rare…not that it was planned this way, but they just never took of really.

    [Reply]

    F*ckYeah Reply:

    Harsh, but spot on.

    [Reply]

    Sebee Reply:

    I have a lovely Ferrari ashtray myself. Gets rid of smoke fast!

    [Reply]

    CL Reply:

    I agree, quite a bit of their merchandising looks cheap/tacky to me.

    [Reply]

    Mike84 Reply:

    Agree, never liked it, but if it makes almost as much as the cars themselves how could they not?

    [Reply]

    Jock Ulah Reply:

    I grew out of the bear a short while back and am now the proud owner of one of their ‘wood pull along cars’.

    Have booked a day out at Mugello and will be dragging it around the track to the accompaniment of my own ‘brmmm-brmmm’ sound effects.

    [Reply]

    Richard Reply:

    But you still want one. We all do. Even if we say we don’t :)

    [Reply]

    hero_was_senna Reply:

    I want one and an original Fiat 500… Oh yeh and an Alfa 1750 GTV once more

    [Reply]


  7.   7. Posted By: Lindsay
        Date: May 9th, 2013 @ 1:27 am 

    Apparently selling more than 7000 cars a year is diluting the brand, but selling branded tat to non-owners worldwide isn’t. Right.

    I’ve got a tip for them for free: if you want to sell fewer cars but for greater profit, send more to Australia. We’re suckers for a bit of automotive price gouging here.

    [Reply]


  8.   8. Posted By: KenC
        Date: May 9th, 2013 @ 2:02 am 

    “Net profit was 54.7m euros (£46.3m).”

    Wow, if Ferrari’s F1 team were self-sponsored, that would not be enough to run the team, Thank god for their sweetheart deal with Bernie and that they have some deep-pocketed sponsors.

    ““The exclusivity of Ferrari is fundamental for the value of our products. We made the decision to make fewer cars because otherwise we risk injecting too many cars on the market.””

    Have they factored in that the global luxury car market has grown significantly with the development of China?

    [Reply]

    Doobs Reply:

    …those fewer cars just got even more expensive.

    [Reply]

    RodgerT Reply:

    And all this time I was thinking that they were already keeping the exclusivity high by building them in such a way that every fifth car built would burst into flames at some point in the first 2 years of ownership.

    [Reply]

    Equin0x Reply:

    What is the problem with some of you? first people on here are bitter and jealous over Vettel now Ferrari’s road car program? give it a rest.

    [Reply]

    Kevin Reply:

    That’s £46.3m for a quarter not a full year.

    [Reply]

    KenC Reply:

    Yes, thank you. Multiply by four and compare to Ferrari’s F1 budget.

    [Reply]

    stoic little Reply:

    They make about $100M a year just by licensing their name to goods.

    KenC Reply:

    @stoic little:
    From the story:
    Sales are £433m) in the first quarter of this year
    After-tax profit was £46.3m
    Pre-tax profit was £68m

    Fiat profit £511m

    Merchandise sales £44m

    There is no breakdown of profit on merchandise sales, BUT, merchandise sales are already included in the company numbers.

    If you are saying that Ferrari makes $100M in profit a year, that would work out to £16.3m a quarter. That would be about 35% of their company profit, and 10% of their sales. I’m not sure that’s such a good thing where t-shirts and hats are so critical to the profitability of the company. Is it a fashion house or a car company?


  9.   9. Posted By: TMAX
        Date: May 9th, 2013 @ 2:07 am 

    Good move . agree to montezemolo’s logic. Premium comes at a price.

    [Reply]


  10.   10. Posted By: Lol
        Date: May 9th, 2013 @ 2:18 am 

    They make fruity roadcars for fruity guys.

    [Reply]


  11.   11. Posted By: JW
        Date: May 9th, 2013 @ 2:41 am 

    I think this is the wrong way to go about it. If you want to make your brand more exclusive, make your products more exclusive. Build cars that are even more sophisticated and expensive. Don’t just artificially limit the production, effectively barring people who have done nothing wrong from purchasing a car that they want. That is not true exclusivity.

    [Reply]

    AndyFov Reply:

    A second hand market awash with used near-new Ferraris going for a pittance does the brand no good at all.

    Based on those figures they’re making the best part of £40k per car. That’d soon be eroded if demand for new plummeted, so limiting supply to manipulate / sustain demand makes sense to me.

    [Reply]

    MISTER Reply:

    Exclusive = limited or limited to possesion.
    It doesn’t matter how sophisticated or expensive the cars are if there are millions produced every year.

    Exclusive means that not everybody can have one, no matter how much money you might have.

    [Reply]


  12.   12. Posted By: mhilgtx
        Date: May 9th, 2013 @ 2:49 am 

    This is sound business for Ferrari.

    Sergio Machionne is damn fine businessman. My reservations for how he has treated Chrysler’s (and many of my clients) dealership base here in the US aside.

    Investment in the Maranello plant is amazing already. The amount of care and technology put into that plant is amazing. Whether it is the extra step of pre-machining the sand molds for the engine and head castings down to the attention put on the final fit and finish the factory and the people that work there are fantastic. For more information http://www.ferrari.com/english/about_ferrari/ferrari_today/the_factory/Pages/the_factory.aspx

    [Reply]


  13.   13. Posted By: Quade
        Date: May 9th, 2013 @ 2:59 am 

    Thats a way of saying, “your next Ferrari will cost that bit more.”

    What image does the Ferrari brand evoke? Picture blood red, think passion; shapely as a woman, but dangerous as a caged tiger. Picture beauty that can stare down Lucifer until he blinks his scaly eye.

    I guess paying extra for the Ferrari brand is worth every penny.

    [Reply]

    Me Reply:

    Nonsense… it’s just a car…

    [Reply]

    Quade Reply:

    No, they are priceless artworks with pedigree, presence and character.

    [Reply]

    F458 Reply:

    well said

    hero_was_senna Reply:

    I love Ferrari, but some of them are best left in locked garages.
    I do love the line about staring down lucifer, brilliant

    Equin0x Reply:

    Yeah every loser’s cliché that sentence.

    [Reply]


  14.   14. Posted By: DB
        Date: May 9th, 2013 @ 5:43 am 

    Products being similar, I won’t pay anything extra for any brand.

    [Reply]

    Me Reply:

    Neither will I…

    Brand be damned…

    [Reply]


  15.   15. Posted By: Craig in Manila
        Date: May 9th, 2013 @ 6:45 am 

    Is Renault also planning to change production rates at their factories in the upcoming year ? Or Mercedes ? Or just Ferrari ?

    Anyways, good luck to the Ferrari employees who will be affected by the reduction in output combined with planned improvements to the factory process.

    Perhaps they can find new jobs making the other 50,000,000 ferrari “branded items” that are sold each year.

    [Reply]


  16.   16. Posted By: Kay
        Date: May 9th, 2013 @ 6:45 am 

    To protect brand exclusivity, all they have to do is just to do a Lamborghini. Bring out ultra rare sleek looking extremely high performance cars, like the Reventon and Veneno, slap a 10 billion dollar price tag to each of them and they’d make more money than selling 3,000 Ferraris.

    [Reply]

    hero_was_senna Reply:

    Kay, do you mean like the FXX or the 599 FXX. All cars sold to special customers for $1,000,000 plus…
    And they never own the car? Inspired lol

    [Reply]

    Kay Reply:

    Nope :) , imho I think that’s a huge ripoff for the buyers LOL, but the FXX programme were all good for Ferrari’s pockets nonetheless.

    I do mean making cars like Reventon and Veneno, rare supercars that buyers get to keep in their own personal museum.

    [Reply]


  17.   17. Posted By: Mon Pen
        Date: May 9th, 2013 @ 7:57 am 

    Fewer cars, more tacky trinkets. Hardly brand enhancing, surely. Nice money spinner though.

    [Reply]


  18.   18. Posted By: Spyros
        Date: May 9th, 2013 @ 8:21 am 

    I thought Ferrari’s main profit maker were keyfobs and hats for Fiat owners… :D

    [Reply]


  19.   19. Posted By: franed
        Date: May 9th, 2013 @ 8:46 am 

    Just a tad different from Longbridge!

    Or from the old AML plat at Newport Pagnell.

    Quite a lot of new plant costs to amortise into the car prices for the future.

    One would expect priced to rise substantially.

    [Reply]


  20.   20. Posted By: Bring Back Murray
        Date: May 9th, 2013 @ 8:58 am 

    It’s almost like every man and his dog has got one these days

    [Reply]

    Richard Reply:

    Well as time has gone on, there are more about obviously!

    [Reply]


  21.   21. Posted By: nukenelly
        Date: May 9th, 2013 @ 9:35 am 

    Sounds logical until you consider all the branded tat and the Abu Dhabi theme park…

    [Reply]


  22.   22. Posted By: I know
        Date: May 9th, 2013 @ 10:04 am 

    Total net profit: 54.7m €
    Income from licensing branded merchandise: 52m €

    This means that Ferrari’s profit is almost entirely due to licensing branded merchandise, with the car business on its own only just breaking even.

    [Reply]

    Kevin Reply:

    I think the profit is for a quarter. The merchandise is for a year. That’s how I read it anyway.

    [Reply]

    Hendo Reply:

    The 52 mill was revenue not profit

    [Reply]

    I know Reply:

    When it comes to collecting license fees for goods that a third party will manufacture and sell, revenue and profit are almost interchangeable.

    Of course, Ferrari needs to continue to build cars in order to generate income from merchandising. However, without licensing its brand to others it would be a much less profitable company. Licensing is not just a questionable sideshow, it’s part of the core business.

    Perhaps the article does mix quarterly and yearly figures, but Ferrari’s business model is really quite unique. Cutting car production by less than 5% has nothing to do with “protecting the brand”.

    [Reply]

    KenC Reply:

    Company sales were £433m, while merchandise sales were £44m, or around 10%.

    [Reply]


  23.   23. Posted By: Monktonnik
        Date: May 9th, 2013 @ 10:18 am 

    I understand about not diluting the brand, but I suggest that this is more about stepped fixed costs.

    [Reply]


  24.   24. Posted By: Jock Ulah
        Date: May 9th, 2013 @ 11:15 am 

    If Ferrari really wanted to promote ‘exclusivity’ it would only supply to those who undertook to make full use of its ‘superior technology’. That is, those who were prepared to race the machines on track, whether in amateur or professional events.

    Most of their output probably ends up in the hands of individuals who wish to demonstrate the size of their disposable income and ‘superior automotive taste’ whilst driving slowly down select high streets.

    Putting it another way – the average actual logged speed of a Ferrari road car is probably similar to that of an average family saloon – an exercise in wasted technology.

    [Reply]

    mhilgtx Reply:

    They are a car company not a racecar company. Make no mistake about it they are FIAT and FIAT run. Segrio is all about controlling cost and inefficiencies.

    [Reply]


  25.   25. Posted By: Richard D
        Date: May 9th, 2013 @ 11:21 am 

    There are probably not many products in the world where you can make more profit by selling fewer!

    [Reply]


  26.   26. Posted By: Charlie
        Date: May 9th, 2013 @ 11:36 am 

    If he wants to protect the exclusivity of the brand, he can start by closing down Ferrari’s global empire of overpriced tat shops and their theme park. Then they can stop production of cars like the California. I’m a Ferrari owner myself (355) and find much of the rubbish spoken by LdM is just embarrassing.

    [Reply]


  27.   27. Posted By: Witan
        Date: May 9th, 2013 @ 12:01 pm 

    A sensible company wants all its customers but ensures it doesn’t need them all – because if you do then you are hostage to fickle market changes.

    So in the face of a recession in the Eurozone, a drop in growth in China and an all round picture of weakness in economies, they are ensuring that they don’t get into the position of having to chase business to survive healthily.

    Good on them.

    If you can do it in a way which makes your brand sound even more exclusive, so much the better.

    [Reply]

    Stephen Taylor Reply:

    Why not rebrand Ferrari to Maserati or Fiat?

    [Reply]


  28.   28. Posted By: Elie
        Date: May 9th, 2013 @ 1:04 pm 

    I’ve never been in a Ferrari but every person I know who’s owned one never kept it, said its impractical and bought something faster for 2/3 the price.

    The move to limit number makes perfect sense to protect the brand- but agree with other posters- all the other prancing horse bits need to disappear also. The move will help them weather any economic pressures that may come in future years also, as sooner or later the u

    [Reply]

    Elie Reply:

    Upward trend of sales and revenues will slow and go back the way anyway.

    [Reply]

    Charlie Reply:

    Did they not know that mid-engined, 2-seater sports cars are impractical when they bought a Ferrari?!

    [Reply]

    Elie Reply:

    Yep – people always dream they can live with a few issues just to have a name and a top notch racing car. But a many bumps on Syd roads teach them otherwise ! :)

    [Reply]


  29.   29. Posted By: Jameson Bates
        Date: May 9th, 2013 @ 5:49 pm 

    I’m not currently in the market for a Ferrari, but this sounds like a solid concept to me. Cutting down on supply may actually allow them to *gasp* increase the price of a Ferrari.

    [Reply]


  30.   30. Posted By: roberto marquez
        Date: May 9th, 2013 @ 8:06 pm 

    Most comments here appear to be from people that has never been on a Ferrari, less owned it.Do you really think he is taking this decision just because it came to him one day? Ferrari is the longest surviving manufacturer of hihg luxury and performance cars, Montezemolo is the heir of that tradition and he knows very well what he is doing.Long live Ferrari.

    [Reply]


  31.   31. Posted By: F458
        Date: May 9th, 2013 @ 11:01 pm 

    This is the right move to make. We can’t have a brand like Ferrari being owned by every tom, dick and harry. The brand has to be preserved otherwise its value will be lost and Ferrari will no longer be perceived to be the dream. Maybe Mercedes/BMW/Audi should have taken a leaf out of Ferrari’s book.

    [Reply]

    KenC Reply:

    “Net profit was 54.7m euros (£46.3m).”

    Right so rather than make Billions of pounds, Merc/BMW/Audi should try to make £46.3m, a quarter.

    [Reply]


  32.   32. Posted By: Mike84
        Date: May 10th, 2013 @ 4:22 am 

    How much of this is because the current factory hasn’t got the capacity to keep up with the demand? Maybe after the new factory is on-line they’ll increase production.

    [Reply]


  33.   33. Posted By: Danny
        Date: May 17th, 2013 @ 4:02 pm 

    Personally I can see the point of Montezemolo…one of the peculiarities of Ferrari, more than other luxury and sport cars, is exclusivity…probably a Ferrari would not have the same charm and appeal if there were many cars like this on the streets…

    [Reply]


  34.   34. Posted By: Andrea
        Date: June 12th, 2013 @ 12:19 pm 

    Ferrari ahs already doubled production in the last 15 years. From 3,500 cars end of 90s to 7,300 in 2013. I think exclusivity can be preserved even with higher numbers, after all they are now selling in the entire world, whilst 30 years ago the market was North America and some Western European countries.

    [Reply]

    Richietheruler Reply:

    The cars they make now are soo good that if they dont limit production when the replacement comes they wont sell as much to new ferrari owners because you’ll have a lot of good cars flooding the market for cheap. So protecting the car buying market ? Yes. Merch makes them money and advertises for them just like F1 does.

    [Reply]


  35.   35. Posted By: Martino
        Date: September 22nd, 2013 @ 5:20 pm 

    very interesting article to read. thanks you for all the information. Regards!

    [Reply]

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