Marchionne Plans to Increase Production

Posted on October 16, 2014.

The following article was first posted on the CNBC website:

Sergio Marchionne
Sergio Marchionne

Ferrari’s new chairman, Sergio Marchionne, told CNBC the company will likely produce and sell more cars to keep up with the fast-growing population of rich people in the world. But he promised that it will never lose its iconic status as the world’s most prestigious car brand.

Marchionne, who will remain CEO of Fiat Chrysler, took the reigns at Ferrari after the departure of longtime chairman Luca di Montezemolo.

In wake of the transition, some Ferrari owners, dealers and collectors are concerned that the company will become more mainstream, like Porsche, by building more mass-produced cars. But in an exclusive interview with CNBC Marchionne said he is committed to preserving Ferrari’s legacy, quality and racing prestige. “The business itself is in good hands with FCA,” he said. “As long as we don’t screw up the DNA of Ferrari.”

Clearly, however, Ferrari will change under Marchionne. Di Montezemolo, an Italian aristocrat with flowing hair, tailored suits and a history in racing, was a staunch defender of Ferrari’s exclusivity and independence. He capped production at 7,000 last year to raise prices for new and used cars, and he promised to hold it to 7,000 this year as well.

Marchionne has said Ferrari could increase production to 10,000 cars to keep up with growing demand. He said this year the company will increase production to 7,200.

The planned boost is worrisome to some owners. “Ferrari is known for its look, sound, its performance capability and how you feel when you’re in it,” said George Konig, a Ferrari owner who saved most of his life to buy his Ferrari. “Why would I want to feel like an Audi or a Porsche owner? I never want to. Dreams go on for years, savings go on for years, so when you finally have it you don’t want to look like the one who’s down the street.”

Marchionne said he is watching “like a hawk” to make sure the U.S. market is not oversupplied. “You’ve got to be careful about limiting the ambition of Ferrari because its customer base is an expanding customer base,” he said. With the explosion in the number of millionaires and billionaires in the world, Marchionne said Ferrari has to keep pace.

He declined to comment on speculation that FCA could sell or spin off Ferrari. But he said the fact that he has taken on the role as Ferrari chairman shows the unit’s importance. “I think that we are good holders of the assets,” he said. “The fact that I have come over as chairman goes to the level of commitment that we have made to this business.”

He cautioned, however, that there are no real synergies between Ferrari and Fiat Chrysler. Ferrari accounts for a tiny fraction of Fiat Chrysler’s sales but 12 percent of its operating profits.

“Ferrari at best is the donor of both engine and technologies,” he said. “But Fiat Chrysler provides nothing regardless of the fact that it makes 4.7 million cars. It is not the donor of anything that is driving Ferrari technology. People who like to talk about the synergies all day will be wasting their time in an FCA-Ferrari world.”

On a personal level, Marchionne said he loves Ferraris. He owned eight, before crashing one in Switzerland in 2007, so he now has seven. When asked which of them is his favorite, he said “The Enzo, because of what it represents. But the 458 to me is the best driving machine ever invented.”

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