Ferrari to reduce vehicle production to preserve exclusivity

Posted on 9 May 2013 by Tim Brown

Ferrari has decided to cut production of its supercars by at least 4% this year, despite an increase in sales, in order to preserve the exclusivity of its brand.

Ferrari chairman Luca di Montezemolo said the company would look to reduce the number of cars it produces to below 7,000 while still aiming to increase profits.

In 2012, Ferrari, whose primary shareholder is Fiat, sold 7,318 cars and has enjoyed growth in revenue of 4% to 551m euros (£433m) in the first quarter of this year. Net profit was 54.7m euros (£46.3m).

On 1,798 cars sold in the first quarter of this year, Ferrari made 80m euros (£68m) before interest and tax. That compares to 603m euros (£511m) on sales of about one million vehicles by Fiat.

The idea behind the move is to protect the resale value of the company’s cars. The Ferrari 458 model has a price bracket of between £178,000 and £199,000, while the entry level California starts from approximately £152,000.

The Italian company cut production in 2003 for similar reasons.

Montezemolo said: “The strength not to listen to people who say ‘your competitors will benefit from this’ is a choice I learned from Enzo Ferrari, who used foresight in enhancing the value of the brand.

“The exclusivity of Ferrari is fundamental for the value of our products. We made the decision to make fewer cars because otherwise we risk injecting too many cars on the market.”

“In all of our 7,000 cars a year, there doesn’t exist one that is like any other,” Mr Montezemolo said. “For me, exclusivity is the strength of the brand. I don’t like to speak of luxury. I like to speak of beauty and taste.”

Montezemolo added that Ferrari’s engine business, which suppliers motors to Maserati, will help keep revenues on track.

The brand continues to do well away from the road car business, with the company earning 52m euros (£44m) in revenue from 60 merchandising licences of Ferrari-branded clothing, watches and other items.

In tandem with the cut in production, Ferrari plans to invest 100m euros (£85m) over the next two years on improvements at its Maranello factory, where 3,000 people work on building 32 cars a day.