Ferrari

Acquired · Apr 13

Ferrari: What happens when you staple a luxury brand to a sports team?

Sells about 14,000 cars a year at roughly 50% gross margins and is valued above Ford, Volkswagen and Mercedes. It cut output from 4,500 to 2,300 in 1993, caps its SUV at 20% of volume, and expects only 5% yearly growth while betting on the electric Luce.

Tips

• Luca di Montezemolo cut Ferrari output from 4,500 cars to 2,300 to rescue the brand▶ 1:40:00Output went from 4,500 cars in 1991 to 2,300 in 1993, and the 1991 peak was not exceeded until 2006.
• Fiat tried to fix Ferrari by making more cars, the cardinal sin of luxury▶ 1:47:40Cars went unsold for the first time and workers were furloughed in 1991.
• Luca di Montezemolo saw Ferrari as a luxury company, not just a racing company▶ 1:59:00Ferrari went from losses in 1992 to 1994 to break even by 1996 and profit in 1997.
• Luca di Montezemolo kept the Formula 1 team winning to feed the Ferrari myth▶ 1:36:40Schumacher and Ferrari won five straight championships from 2000 to 2004, and Ferrari took 19 titles under Luca, more than under Enzo.
• Enzo Ferrari ran the racing team, the car maker and the client services under one roof▶ 48:00Ferrari is the only F1 team operating continuously from the start of the sport in 1950 to today.
• Luca di Montezemolo capped the Purosangue SUV at 20% of Ferrari sales▶ 2:50:00Lamborghini now sells over 60% SUVs, while Ferrari holds its SUV at 20%.
• Enzo Ferrari built the myth through the logo, the red color and a cold shoulder to buyers▶ 25:00Luca di Montezemolo called Enzo Italy's Steve Jobs, a natural-born entrepreneur and marketer.
• Enzo Ferrari let a rival buyer's bid make headlines, then used it as marketing▶ 1:16:00Ford beat Ferrari at Le Mans in 1966 with a one, two, three finish, but Ferrari kept control of racing and its legend.
• Enzo Ferrari sold half the company to Fiat in 1969 to keep it Italian and keep racing▶ 1:21:24Valued at 6.8 million dollars in 1969, and at 192 million dollars when Fiat bought the other 40% in 1988.
• Luca di Montezemolo made Ferrari's cars drivable and kept a race look▶ 1:55:00The 355 was 70% of Ferrari sales by 1997.
• Ferrari builds every car to order, in one factory, with no parts shared with other brands▶ 2:06:40Ferrari plans about four new models a year and any car can be built on any line.
• Ferrari builds a pyramid of models and experiences so every client has somewhere to graduate to▶ 3:00:00Over 90% of the 330,000 Ferraris ever made are still on the road.
• Ferrari's most expensive models earn a huge share of profit through scarcity▶ 3:03:20Ferrari's average gross margin is 50% against 7% for Ford and 15 to 25% for Porsche, with over $170,000 gross profit per car.
• Enzo Ferrari ran racing as the marketing engine before he ever sold a car▶ 18:20Ferrari won 7 of 14 races in 1947 and the 1949 Le Mans win came in a private client's car.
• Enzo Ferrari partnered with Pininfarina for 61 years instead of designing bodies himself▶ 58:20The partnership lasted 61 years across generations, and the 250 series is among the most beautiful cars ever built.
• Enzo Ferrari's father taught him that a company is perfect when partners are odd and fewer than three▶ 7:00
• Enzo Ferrari turned death and controversy into demand▶ 1:11:40Production rose to 300 cars a year by 1960 and 500 by 1962, a third each to Italy, America and the rest of Europe.
• Enzo Ferrari chose a young outsider, Luca di Montezemolo, to fix what he could not▶ 1:33:20Ferrari won the 1975 drivers and constructors championships, ending a 10-year drought.
• Sergio Marchionne used the 2015 Ferrari IPO and debt transfer to repair Fiat Chrysler▶ 2:25:00Ferrari rose from a $9.8 billion market cap at IPO to near $100 billion at its peak.