Sergio "Ferrari NA V12s Are Here To Stay"

It is a cap due to CO2 or sth like that restrictions.

 

Agreed. Going over 10k units per year only makes sense if they want to grow substantially.

 

I'm not so sure to grow they necessarily have to lower their prices. I think the market is actually expanding.

 

Hmmm, does anybody remember when they said this about V8s? I wonder if it's more a question of what value does the TC bring, where emissions get tighter and NA performance against competitors is harder to achieve without increasing displacements.

Ferrari have a knack of doing what they said they wouldn't (e.g. Turbo mainstream V8s, front mid engined cars). Because times and technology change.

What they seem good at is bringing to market a working product that isn't blighted by being the first generation of its kind. And marketing the company position not as a u-turn, but as (now) leading in a particular area.

As long as you can make a class leading NA V12 (hybrid) that meets emissions and outperforms rivals, then I'm sure Ferrari won't TC them (yet).


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Absolutely CORRECT.
THAT is the key.

Marcel Massini

 

So why do they care about increasing sales now. From 8000 to 10,000 sets up an expectation with shareholders.

Is the future more models, fewer of each, higher prices/more exclusive, 9999 max sales per year?

 

Maybe the reverse of how they used to homoglate enough road cars for competition damn those visible chassis numbers...?

Expect to see Maserati and Alfa increasingly try to cover off stuff...?

Can you see a NA v12 Ferrari SUV? This is probably where they can use hybrid and TCs and meet emissions? Claiming that TC is acceptable due to the type of use/vehicle.

But a Ferrari Bentayga or Cayanne... pretty niche even for China and ME markets? Interesting to see a seven seat full 4wd.....


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Marchionne said no about a Ferrari SUV or a four doors car more than once. The idea of developing the "non-car" luxury side of the Ferrari brand was mentioned one year ago during an interview with Autocar. Same for naturally aspirated V12 engines. Nothing new there too.

 

According to information available in 2016 Ferrari cars shipments totaled approximately 8.000 units divided accordingly:

Europe + Middle East+ Africa : 3.500 units (44% of the total market, sales +14% than in 2015)

Americas: 2.700 units (34% of the total market, sales +0,5% than in 2015)

Greater China: 700 units (9% of the total market, sales + 25% than in 2015)

Japan, Australia+Rest o the world:1100 units (14% of the total market, sales in line with 2015)


If shipments continue to increase at the pace of 2016 of + 4% a year it would take roughly 5-6 years (2021 - 20022) to reach the goal of 10.000 units sold.

Because the main goal of Mr. Marchionne is to increase profits in order to do that Ferrari needs to sell more cars and increase the profit on each car by using standard platforms to reduce production costs and by making it almost compulsory for buyers to add expensive features to the base cars.

We don't know what's Ferrari installed production maximum capacity in terms of units but I would guess should be around 10.000 cars per year. Any production increase above this number probably will need large investments in the factory and will start having an effect on exclusivity and delivery waiting lists.

 

Who would buy a Ferrari SUV with an NA V12 that does 0.1MPG? I doubt anyone. If they want to launch an SUV they need to develop an engine that has a sensible MPG suited for an SUV.

Since we're talking SUV's I will thrown in the devil's name.... diesel! The Cayenne saved Porsche; agreed. The diesel engine made them rich however!

Something Ferrari will never do, so it will be hybrid. But I doubt a V12.

 

In 5 years time we will still have this discussion and people will still be waiting for that elusive SUV.

 

20 years time I'll be able to afford a used one!


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Thanks for the stats. I agree with your conclusions. Yes, within that 10k units limit that REALZEUS and Mr. Massini mention, they have to grow both volume and profits per unit because they need to show (and this is important) quarterly profit growth for the stock market. Its a relentless pressure.

 

Public companies can also offer dividends to support the stock.

Will Ferrari grow sales volume beyond 10,000 cars/year. Ferrari has already stated that they need to sell less cars than the demand.

And is there a point where a yearly price escalation of the base price and option/upgrades will begin to negatively affects sales?

 

I'm not sure I've ever seen Mr. Marchionne state they need to sell less than demand. I have seen him state they want to cut wait times down. I think the rule Mr. Ferrari enunciated regarding 1 less than demand is likely still in effect though.

I am sure there is a point where raising prices will negatively affect sales- but I think Ferrari is actually a long way from that.

BUT

As I see it, its really not the first buyer price they need to worry about its the resale market as strong residuals has been a part of the Ferrari experience for a long time now. These strong residuals allow them to sell the same customer a new car every few years. And some customers more frequently. So its possible one customer might have a 488 in year one, a 488 in year 3 and then a 488 VS. 3 sales on 1 customer.

Make the going in price too high, now that customer would lose too much and he/she only buys that first car.

I always felt LDM had the balance about right. I think the jury is out on Mr. Marchionne. He might be right. Time will tell.

I also wonder about timing. I think Mr. Marchionne said he will likely step back from FCA sometime in like 2019. I wonder if he might like to remain at Ferrari, and if so, maybe then Ferrari will have fulfilled its role as helping to absorb some of FCA's debts. And at that time, maybe it might be more desirable for Mr. Marchionne to be chairman of a private company and perhaps he takes Ferrari private with the help of some venture money.... this is 100% total pure speculation.

PS- I like dividends. I am a RACE shareholder. I would gladly accept one F12tdf as a dividend

 

Not growing anywhere near fast enough. It's basic economics, if you want to grow faster than the market, and Ferrari does, you must have a lower average unit price relative to the market.