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The Ferrari formula

: Sunday, November 17 - 2013 @ 07:03

By Gautam Sharma

 

Aficionado visits the Ferrari factory in Maranello, where company chairman Luca di Montezemolo elaborates on how the storied automotive brand will maintain its high levels of success and desirability.

 

It’s not often a company chairman invites 250 journalists from around the world, only to announce plans that involves selling less units than the year before. Yet, this is precisely what transpired when Ferrari supremo Luca di Montezemolo recently hosted a large-scale press conference at the company’s headquarters at Maranello, in northern Italy.

 

Ferrari last year sold 7318 cars around the world, but the plan this year is to build and sell a few hundred less as part of the company’s strategy –it’s a curious strategy but the aim, we’re told, is to ensure the brand retains its aura of exclusivity.

 

“My focus this year and in the years to come is not to grow volume but to increase the exclusivity of Ferrari,” di Montezemolo says. “This protects our margins and residual values for our customers. The exclusivity of Ferrari is fundamental for the value of our products. We don’t sell a normal product. We sell a dream.”

 

“A Ferrari is like a beautiful woman, she must be worth waiting for and desired. I base my ideas on what I learned from Enzo Ferrari, if we produce less cars, we will not flood the market and it makes our used cars more desirable too.”

 

Ferrari’s revenues in the first quarter of this year were up 8 per cent to 551 million euros ($715 million), yielding a net profit of 54.7 million euros ($71 million), which is an increase of 42 per cent over the same period of last year. In other words, there are clearly no glaring shortcomings in the Maranello-based company’s business model.

 

Selling fewer cars this year won’t necessarily diminish revenues, as among the brand’s upcoming big-ticket items is the new LaFerrari hypercar that launches in September, wearing a pricetag around the $1.3m. However, you can put that chequebook away, because all 499 examples slated for production have already been pre-sold.

 

Although the LaFerrari is a propelled by an enviro-friendly hybrid powertrain (its potent V12 engine is backed up by a supplementary electric motor), di Montezomolo says the company will never build an all-electric car on his watch, which undoubtedly comes as a huge relief to every died-in-the-wool petrolhead out there.

 

The LaFerrari launches into the market around the same time as mega-exclusive rivals from Britain and Germany – Porsche is currently readying its 918 uber-flagship, while McLaren is applying the finishing touches to its ultra-high-tech P1. Both of these will also be priced around the $1m mark, which is clearly a sign the worst of the global recession is over.

 

Ferrari’s Maranello factory produces 32 cars a day, with no vehicles exactly the same as there are thousands of permutations based on trim colours and materials, optional equipment and wheel designs. Few buyers who fork over a large wad of cash for an ultra-premium car these days do so without individualising it in at least some way. Rolls-Royce and Bentley are big on personalised tailoring, and Ferrari has also gotten into the act via its Atelier and Tailor Made divisions, which, apart from giving the customer exactly what he or she wants, also adds to the profit margin Ferrari earns from each car – so it’s a case of win-win.

 

The Atelier division can provide any number of paint and interior trim combinations –provided they’re in keeping with the brand’s core values. So if you walk in say, “I’d like my Ferrari painted the colour of this necktie or nail polish”, the team will do its best to accommodate your request. However, if you barge in and say you want a pink Ferrari, you’re not going to have much luck, as this would conflict with the image Ferrari wants its offerings to project. The Atelier division does periodically receive requests it can’t fulfil, but in each case they propose an alternative solution.

 

Whereas the Atelier team only deals in colours and trim materials (nothing is changed as far as the car’s overall design is concerned), the Tailor Made, One-to-One, and Special Projects divisions can accomplish virtually anything.  A high-profile example is the bespoke Ferrari SP512 (which started life as a 458 Italia) prepared for musician Eric Clapton.

 

A keen ‘Ferraristi’ and car connoisseur, Clapton wanted his car to look like the 512 Berlinetta Boxer produced during the 1970s and ’80s. Ferrari obliged, and the completely rebodied car that resulted was dubbed the SP512 EC. Clapton was delighted, while Ferrari lightened his wallet to the tune of $4.7 million for the car, so all parties ended up getting what they wanted.

 

In a similar vein is the Classiche division, which was set up to restore and repair customer-owned Ferraris that are more than 20 years old. As we walk through the workshop, there’s a 250 GTO that’s undergoing a complete front-end rebuild after its owner managed to crash it in a historic race.

 

The repair bill will cost about $150,000-$200,000, but that’s almost insignificant when you take into account the car is valued around $30 million (an apple-green 250 GTO that belonged to former F1 driver Stirling Moss recently sold for $35 million). The Classiche division’s archives contain the technical drawings for every Ferrari built since 1947, so every car brought in for restoration is rebuilt to precise factory specifications.

 

Further boosting Ferrari’s bottom line is the company’s expanded engine-building business, which supplies powerplants to Fiat Group stablemate Maserati for its new Quattroporte and Ghibli line-ups. Ferrari has pumped in $40 million euros to the new V6 engine plant, which currently employs 100 workers, with 100 more set to join as production ramps up.

 

When you have a fan base as strong as Ferrari’s (the brand has 12 million Facebook followers), there’s also a lot of money to be made in merchandising, and the prancing horse has done exactly that, cashing in $68 million in profits last year from selling branded caps, T-shirts, shoes, mobile phones, watches and so forth.

 

The Italian sportscar maker has forged alliances with Vertu, Hublot, Tod’s Shoes, Puma (which supplies all the apparel for Ferrari’s F1 team, apart from selling a line of Ferrari-branded gear), Mattel, Lego, Sony, Microsoft, Shell and more. It’s been a highly lucrative exercise, too. As an example, more than 14 million Lego Ferraris have been sold through Shell petrol stations around the world.

 

Living where we do, many of us have visited Ferrari World in Abu Dhabi, which spans a massive 200,000 square metres and houses – in addition to the world’s fastest rollercoaster – the biggest and best performing Ferrari Store in the world. The giant theme park has been such a success – both in terms of revenue generation and brand building – that another one will follow over the coming years. Ferrari execs won’t as yet reveal the location, but there’s a reasonable chance it could be in China, opening up the brand to what’s emerging as the world’s largest car market.

 

However, di Montezemolo says that while the spin-off business has been great for Ferrari, its focus would always remain on its core activity – building, selling and racing cars. This is heartening news, not only for diehard Ferraristi, but also for anyone who appreciates one of the purest (in terms of its engineering integrity) brands in the automotive arena. The future looks bright…red.

 

Inside the factory

I almost expected to see men brandishing specialised handcrafting tools and wearing overalls with oily rags hanging from the back pocket, working in an environment of organised chaos within dimly lit warehouse-style buildings.

 

Thirty or 40 years ago, this may have been the case, but the Ferrari factory of today is as automated and cutting edge as virtually any around the world. Although the tradition of handcrafting is still alive and well, much of the work is carried out by highly sophisticated robots that guarantee speed and precision.

 

The ambience within the various factory divisions is also not what I had anticipated. The painted floors are almost shiny enough to see your reflection in them, while all around are pot plants that, apart from having a soothing effect, add oxygen to the air. Walking through the assembly line where the V12 models (FF and F12) are built, I gaze out the wall-to-wall windows to see picturesque hills and mountains in the distance.

 

Employees are also well looked after, as Ferrari provides them with facilities such as a cinema, gym (with personal trainers) and subsidised schooling for those with children. No surprises, then, that Ferrari was nominated the best company to work for in Europe.

 

This article first appeared on http://aficionadome.com

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Sunday, November 17- 2013 @ 7:03 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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