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Ferrari to cut production of road cars to protect exclusivity of brand

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Ferrari to cut production of road cars to protect exclusivity of brand
May 9, 2013, 12:01 AM

Ferrari has decided to cut production of its high-performance road cars by at least 4% this year, despite an increase in sales, as the Italian luxu...

Ferrari has decided to cut production of its high-performance road cars by at least 4% this year, despite an increase in sales, as the Italian luxury car manufacturer seeks to preserve the exclusivity of its brand.

In 2012, Ferrari sold 7,318 cars but chairman Luca di Montezemolo said the company would look to reduce that figure to below 7,000 vehicles while still aiming to increase profits.

Despite the global economic outlook remaining uncertain, Ferrari has seen a growth in revenue of 4% to 551m euros (£433m) in the first quarter of this year. Net profit was 54.7m euros (£46.3m).

Ferrari continues to provide a vital contribution to owner Fiat. 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. Ferrari’s entry-level California model costs around 185,000 euros (£157,000) in Italy, rising to 272,000 euros (£230,000) for the top of the range 12-cylinder F12.

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.”

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.

Montezemolo said: “Ninety-five branded items are sold every minute around the world.”

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.
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