Ferrari’s options after Montezemolo

After 23 years at the helm of Ferrari, Luca di Montezemolo leaves the company he cherished in the hands of Sergio Marchionne, CEO of the Fiat-Chrysler Automobiles (FCA) the group that owns Ferrari. The changeover will happen next month but the question remains about what Marchionne intends to do the Italian super-luxury brand.
While Montezemolo guarded the exclusivity and independence of Ferrari closely and restricted production to 7,000 cars per year; Marchionne is more pragmatic in seeking more profit for the FCA group while pondering what to do with Ferrari.
His options include offering the company on the stock market for sale as an IPO or sell it to another car group for a good profit margin.
Marchionne can also split FCA to leave Ferrari, Maserati and Alfa Romeo in a parallel luxury group and give it autonomy.
He can also leave Ferrari as it is and raise its production to 10,000 units per year as he promised to do.
That decision was one of the clash points which led to the resignation of Montezemolo.
However, any decision to offload Ferrari would be a great loss to the image of FCA and would leave Fiat as a sub-brand of Chrysler. Chrysler would take the lead role in product planning and development because, except for a family of small cars based on the Fiat 500, the bulk of global volume would come from Chrysler, Dodge, Jeep and Ram.
Also, Ferrari is a double-digit profit generator for the FCA group.
The supercar maker accounts for 12 percent of FCA’s operating profits on just 0.16 percent of its sales. Marchionne says Ferrari could teach other brands a little something about luxury.
He called it a “good school” to help Maserati and Alfa Romeo improve their lineup.
One point Marchionne got right and that is the increase of Ferrari’s sales volume by almost 50 percent.
He noticed that the number of wealthy individuals around the world has grown by a large margin in recent years, while the waiting list on Ferrari deliveries is getting longer.
High net worth individuals do not like the idea of waiting too long for their luxury products to be delivered and many of them have gone elsewhere to satisfy that demand.
Marchionne wants them back with Ferrari and he is right to increase production.
As for the exclusivity factor, Ferraris are still very rare even at 10,000 units which is infinitesimally small compared to world car population.
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Adel Murad is a senior motoring and business journalist, based in London.
Email: [email protected]