Luxury supercar maker Ferrari is on a winning streak. For years, its shares have risen consistently. And even the untimely death of the late Sergio Marchionne, the brand’s “superstar CEO” wasn’t able to derail this trajectory for more than about a quarter. As the brand announces a slew of new models, and talks ambitious business strategy that will see it ramp up profit into the 2020s, should investors be concerned that Ferrari is chipping away at its own exclusivity? According to chief marketing and commercial officer, Enrico Galliera, the answer is a resounding no.
Ferrari’s share price has appreciated by 55% so far this year
Source: Yahoo Finance
Galliera says that Ferrari is committed to producing fewer cars than the market demands, nurturing year-long waiting lists and privileging its biggest-spending and most-loyal clients. In a recent interview with Motor1, he told journalists:
“Ferrari focuses on exclusivity, and sometimes this means making customers wait for their car – to dream about their car. They will enjoy it more. Q4 [2018] was one of the healthiest periods of the company, with a healthy waiting list—perhaps almost too healthy.” He went on to reaffirm the company’s strategy with a quote from its founder, Enzo Ferrari: “Ferrari will always deliver one car less than the market demand.”
Ferrari’s appeal is based, in no small part, on this exclusivity. It gives the brand an aspirational status that few others can match – something which is reiterated by Ferrari’s high price points. With these things looking set to remain – in spite of electrification, SUVs, and a focus on increasing profit – investors should remain confident that Ferrari’s luxury credentials are not at risk.
Disclosure
Dominion holds Ferrari in its Global Trends Luxury Fund.
Author: Theo Leworthy
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