Ferrari to cut car sales to protect exclusivity
Ferrari will limit sales of its sports cars this year to protect the brand's aura of exclusivity, chairman Luca Montezemolo has said.
Wealthy people around the world are snapping up Ferraris and the company is worried the brand might lose its appeal as a symbol of rarefied luxury. As a result, it will scale back production to below 7,000 units this year, compared with 7,318 last year.
"The exclusivity of Ferrari is fundamental for the value of our products," Mr Montezemolo told journalists at the company headquarters near Modena, in northern Italy. "We don't sell a normal product. We sell a dream."
Ferrari sales were up 4pc in the first quarter, to 1,800 units. Mr Montezemolo said he will provide a detailed outlook in the coming months but estimated the drop in unit sales this year will be greater than 1pc or 2pc.
Revenues in the first quarter of the year were up 8pc to €551m, yielding a net profit of €80.5m, which is an increase of 42pc over the same period of last year.
Mr Montezemolo said Ferrari's engine business - which supplies motors to Maserati, also owned by Fiat SpA - will help keep revenues on track as it scales back unit sales. Ferrari recently invested €40bn in a new V6 engine plant to supply Maserati. The plant began work in January with 100 workers, and there are plans to add another 100 as production builds up.
The strength of the Ferrari brand, besides generating more demand than Ferrari cares to supply, has also boosted merchandising, which last year generated €52mn in profits. But the chairman dismissed any notion that Ferrari would become a "shirt and polo" company.
Mr Montezemolo said that Fiat, Ferrari's main shareholder, supports the move to limit production. And he ruled out an IPO for Ferrari, a possibility that analysts have floated as Fiat looks to merger with its unit Chrysler.
Global demand is helping Ferrari buck the ongoing Italian recession. The company is hiring 250 blue collar workers this year as it boosts engine production for Maserati, which has launched the new Quattroporte and will follow soon with the smaller Ghibli as part of Fiat's plans to focus on higher-margin luxury cars to return its European operations to profitability.
Mr Montezemolo said Ferrari will invest another €100m in 2013-2015 on new facilities.
In all, Ferrari employs 3,000 people to produce five production models based on V-8 and V-12 engines. It also makes limited edition exclusives, like the hybrid La Ferrari shown this year at the Geneva Motor Show and which has already sold out to a selected 499 clients, in addition to the Formula 1 program. All of it, from the foundry for engine heads to an "atelier" where clients customize their Ferraris down to the stitching on the leather seats, is located on a leafy green complex that employees can navigate on bicycle. The factory produces 32 cars a day.
"In all of our 7,000 cars a year, there doesn't exist one that is like any other," Mr Montezemolo said. "For me, exclusivity is the strength of the brand. I don't like to speak of luxury. I like to speak of beauty and taste."
The US remains Ferrari's main market in terms of unit sales, followed by Chinese-speaking nations, Germany and then Britain. Currently, Europe and the Middle East contribute 52pc of revenues, America 20pc and Asia 30pc. By 2017, Mr Montezemolo wants to shift the distribution to 30pc each from America and Asia and 40pc from Europe and the Middle East.
Mr Montezemolo said there are two things that Ferrari will never do as long as he is running the show: make a smaller Ferrari or an all-electric vehicle.