For Ferrari, proving it can thrive as an independent sports-car maker may be a tougher challenge than a Formula One victory.
Following its spin-off next year from parent Fiat Chrysler
Automobiles, the global cachet of the Ferrari name will be key to
master hurdles such as the costs of developing cars that meet the
standards of its elite customers.
Ferrari's self-imposed production cap at about 7,000 cars a year,
aimed at preserving the exclusive appeal, will limit growth potential
in an industry where scale can be paramount to survival.
The threat of being squeezed out of a market has driven Bentley,
Lamborghini and Porsche into the arms of Volkswagen, and Rolls-Royce is
now part of BMW.
Aston Martin, which has struggled since being cut loose by Ford
Motor in 2007, is cosying up to Daimler to access technology, while
British sports-car maker Group Lotus is cutting its workforce by up to
27 per cent to survive.
"It's getting increasingly difficult to operate in a market niche
like sports cars as a stand-alone company," said Mr Stefan Bratzel,
director of the Center of Automotive Management at the University of
Applied Sciences in Bergisch Gladbach, Germany.
What might set the Maranello, Italy-based company apart from other
sports-car makers is what Brand Finance lauded last year as the world's
"most powerful" brand, beating even Apple. The consultancy cited the
loyalty of Ferrari's customers and its high margins.
Ferrari has perfected the balance between a luxury product that only
the very wealthy can call their own and a brand recognition that is
universal.
It is supported by the quasi-religious loyalty of devout fans
ranging from young boys plastering their bedrooms with Ferrari posters
to Formula One fanatics to rich serial buyers who will spend any sum on
the latest model.
Ferrari's independence was the result of mounting debt at Fiat
Chrysler, which is seeking to finance a five-year, €48-billion
(S$77-billion) investment programme.
With the focus on expanding the Jeep and Alfa Romeo brands globally
and Maserati already part of the portfolio, the opportunity to cash in
on Ferrari's allure was hard to pass up.
Under the plan, Fiat Chrysler will list 10 per cent of Ferrari in
the United States and possibly Europe, and the remainder will be
distributed to its investors.
That serves as an enticement to buy a mandatory convertible bond and as many as 100 million shares.
Italian investment bank Mediobanca estimates Ferrari's stand-alone
value at about €9 billion. The remaining 10 per cent of the sports-car
maker is owned by heirs of founder Enzo Ferrari.
In the third quarter, Ferrari posted earnings before interest and
taxes of €89 million on revenue of €662 million, giving it a profit
margin of 13.4 per cent.
The maker of the US$319,000 (S$408,000) F12berlinetta also will not be totally cut loose from Fiat Chrysler.
Chief executive officer Sergio Marchionne plans to remain on as
Ferrari chairman. He took on that role earlier this month after
orchestrating the departure of Mr Luca Cordero di Montezemolo, the
long-time boss of the super-car brand.
The Agnelli family, which founded Fiat, will also be the biggest shareholder of both carmakers.
Ferrari has proven its broad appeal, licensing its name to the
Ferrari World indoor theme park in Abu Dhabi, the world's biggest.
Opportunities to extend beyond exotic sports cars could be more aggressively pursued when the company becomes independent.
"Ferrari is a lifestyle," said Mr Joe Phillippi, president of
AutoTrends Consulting. "It's Vogue and Town & Country and
Architectural Digest all wrapped around a Ferrari prancing horse. That
makes it more than just a car company."
