Production cut to boost Ferrari

2013-05-09 05:43

MARANELLO, Italy - Ferrari will limit sales of its high-performance street cars through the rest of 2013 to protect the brand's aura of exclusivity.

Wealthy people around the world, chairman Luca Montezemolo said, are snapping up Ferraris and the company is worried the brand might lose its appeal as a symbol of rare luxury. As a result, it will scale back production to less than 7000 units in 2013 from 7318 the previous year.

Montezemolo at the automaker's HQ near Modena in Italy: "The exclusivity of Ferrari is fundamental for the value of our products. We don't sell a normal product - we sell a dream."


Ferrari sales were up four percent in the first quarter of 2013 at 1800 units. Montezemolo said he would provide a detailed outlook in coming months but estimated the drop in unit sales for 2013 would be more than a couple of percent. Revenue in the first quarter was up eight percent to €551-million ($722-million, yielding a net profit of €80.5-million, an increase of 42% over the same period a year earlier.

Montezemolo said Ferrari's engine business, which supplies power to Maserati which in turn is owned by Fiat, will help keep revenues on track as it scales back unit sales. Ferrari recently invested €40-billion in a new V6 engine plant to supply Maserati. The plant began work in January with 100 employees; anotherr 100 will be added as production builds.

The strength of the Ferrari brand, besides generating more demand than Ferrari cares to supply, has also boosted merchandising which in 2012 generated €52-million in profits. But the chairman dismissed any notion that Ferrari would become a "shirt-and-polo" company.


Montezemolo said Fiat, Ferrari's main shareholder, supported the move to limit production and he ruled out an IPO for Ferrari, a possibility analysts had floated as Fiat looks to merge completely with its latest acquisition, Chrysler.

Global demand is helping Ferrari buck the ongoing Italian recession. The company is hiring 250 blue-collar workers 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.

Montezemolo said Ferrari would invest another €100-million in 2013-2015 on new facilities.

In all, Ferrari employs 3000 people to produce five models based on V8 and V12 engines. It also makes limited edition exclusives sich as the hybrid La Ferrari shown at the 2013 Geneva auto show and which has already sold out to 499 clients, in addition to the Formula 1 programme. All of it, from the foundry for engine cylinder heads to an 'atelier' where clients customise their Ferrari down to the stitching on the leather seats, is in a leafy green complex that employees can navigate on bicycle.

The factory produces 32 cars a day with one 8-5 shift on the assembly line.


"In all of our 7000 cars a year, there doesn't exist one that is like any other," 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 Britain. Currently, Europe and the Middle East contribute 52% of revenue, America 20% and Asia 30%. By 2017 Montezemolo wants to shift the distribution to 30% each from America and Asia and 40% from Europe and the Middle East.

Finally, he said there were two things Ferrari would never do as long as he was in charge: make a smaller Ferrari or a battery vehicle.