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Ferrari Upheaval Likely To Mean Sales Increase, More Models

Ferrari Upheaval Likely To Mean Sales Increase, More Models

“Most likely is taking the restriction off of the brand’s output and meet as many orders as possible”.

Recent shenanigans at Ferrari mean this exotic Italian sports car maker could soon be raising its output, extending its range, or both.

Fiat Chrysler Automobiles (FAC) CEO Sergio Marchionne replaced chairman Luca Cordero di Montezemolo with himself, and this also led to speculation Ferrari, and its slightly humbler sibling Maserati, might be sold to pay off some of FACs debt mountain.

Marchionne denied he planned an imminent sale of Ferrari, which is owned 90 per cent by FAC, but added the decision was with the board, not him.

Ferrari’s lack of success on the F1 circuit was said to be one of the reasons for Montezemolo’s demise, but the lack of a world title since 2007 doesn’t seem to have hurt sales, which reached about 7,000 last year from 3,700 in 2001. Ferrari, with nearly 0.2 per cent of FAC’s 4.4 million sales accounts for about 12 per cent of Fiat’s operating profit. Ferrari F1 performance under the new rules this year hasn’t notched up much success either. But differences on business strategy for Ferrari are a more likely cause of the split with Montezemolo, who had been at Ferrari’s helm for more than 20 years.

   According to Ian Fletcher, analyst with IHS Automotive, Montezemolo wanted to keep output close to current levels and retain exclusivity. Marchionne wants to raise sales and make more money. Earlier this year Marchionne said sales could reach 10,000 without hurting the brand. Fletcher said there was a possibility of increasing Ferrari sales by moving a bit downmarket, without impinging on the territory of Fiat’s other sports car brand, the less exotic Maserati.

Bumper 2015, 2016
“Most likely is taking the restriction off of the brand’s output and meet as many orders as possible. If this is the case, it could lead to a bumper 2015 and 2016 with the launch of the heavily upgraded California T and 458 model, the most accessible models in Ferrari’s line-up for the moment. There could also be the possibility of widening its model range as well,” Fletcher said.

Ferrari’s model range in the U.S. starts with the California T, priced at just over $200,000, and includes the Berlinettta, FF, 458 Italia, Spider and Speciale, topped off by the LaFerrari at $1,350,000.

Investment bank Credit Suisse doesn’t think FAC will sell off Ferrari, and pointed out that it and Maserati would find it hard to survive alone because government regulations would outlaw their gas-guzzling engines. They rely on being part of a big manufacturer so their excessive fuel use can be averaged down. Credit Suisse said FAC’s debt of 9.7 billion euros ($12.6 billion) is unsustainable.

IHS Auto’s Fletcher said selling off Ferrari and Maserati would be good for FAC’s finances, but might harm its allure to investors who might be called upon soon to back a capital raising exercise.

On balance he reckons a sale is unlikely.

“However, with the company’s attentions being closely focussed on merging Fiat and Chrysler successfully and listing this business on the New York Stock Exchange, this is unlikely to be a decision made in the near term, if it is on the agenda at all,” Fletcher said.

FAC shares will list on the NYSE October 13.

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