Before Ferrari can become a de rigueur lifestyle brand, CEO Sergio Marchionne and others at the newly independent company must figure out how to transfer the allure of Ferrari’s sports cars to other walks of the retail world. So far, they haven’t done it very well.
Sales of Ferrari automobiles have continued growing apace since the spinoff of Ferrari from Fiat Chrysler last fall and its IPO, with record sales and a 9.4 percent increase in net income last year.
And to many automotive enthusiasts and collectors, there’s still nothing quite like a Ferrari, new or old. That’s why Victoria’s Secret billionaire Les Wexner no doubt is relieved that after a legal dispute, he can finally take title on a Ferrari 375-Plus—one of only five produced—for which he paid about $20 million.
Also, the company continues to prove Ferrari’s chops, such as with a new video in which a Ferrari F40 makes its way—helmed by an expert driver—up a snowy mountainside at Ryuoo Ski Park in Japan.
But income from licensing the Ferrari brand in other arenas—ranging from $2,200 cashmere bomber jackets to a Ferrari amusement park in Abu Dhabi—has fallen far short of Marchionne’s hopes to transform it into a “fully fledged luxury brand”—it amounted to only about 1 percent of Ferrari’s revenues in 2014.
Marchionne wants Ferrari to compete with luxury-apparel brands including Hermès and Prada, and figures the iconic marque should have the chops to do so as long as he has the right management in place to pull it off. And he has loaded the Ferrari board and executive ranks with lifestyle-brand experts.
But without the backing of a huge auto company any longer, these people also must cope with pressures such as a 20 percent tumble in Ferrari’s stock price since its October listing, keeping Ferrari’s car development and sales network competitive with other upper-tier automotive brands, and even deciding whether to maintain the company’s pricey and demanding presence in Formula 1 racing.
“Ferrari has an identity crisis,” Adam Wyden, founder of ADW Capital Partners in Washington, told Bloomberg. But Marchionne, who also remains CEO of Fiat Chrysler, told the publication that Ferrari has “a great basis and great DNA [on] which to build the brand extension.” The company just has to “do it very carefully” to maintain its high-end image.
To that end, Ferrari is working with partners to bring out new products by the time the brand celebrates its 70th anniversary next year.
Ferrari World, its first-ever theme park, provides a glimpse at some of what Ferrari might do in the future. It is working on a second park in Spain, and reportedly the third will be built in China. There’s also speculation that a fourth Ferrari World someday will be built in North America.
Odds-on favorite site possibilities are Central Florida and Las Vegas. Hmm, the land of Mickey Mouse or the land of high rollers? If you were Sergio Marchionne, where would you put the fourth Ferrari World?