The rest of the automotive industry might be watching in horror As the World Downturns, but Ferrari had a bit of a giggle all the way to the bank last year. The FIAT division ended 2008 some $437.7m ahead, on sales of 6587 vehicles (up two percent). While sales in Ferrari’s biggest market (that’s US) remained flat, they swelled in Eastern European (+23 percent), China (+20 percent), the Middle East and South Africa (+12 percent). With the feds capping salaries, and austerity chic sweeping Spago’s (“I’ll just have the lettuce leaf”), it’s entirely possible that that Ferrari’s ’08 sales surge represents a dead cat bounce. And there’s a seguire il denaro story behind the story . . .
You know that Ferrari-branded Acer 1200 laptop Autoblog (and thus TTAC) featured on our hallowed web pages? Grande lire. Maranello’s licensing, retail and e-commerce efforts are up 28 percent. Online merchandise sales increased by a whopping 65 percent. And sales of dust collectors and other “I wish I could afford a car instead of this hugely overpriced umbrella” Ferrari-branded knick-knacks jumped 16 percent at Ferrari’s 25 retail outlets. Is that what they call a Ferrari dealership these days?
Ferrari’s 25 retail outlets. Is that what they call a Ferrari dealership these days?
No, they have actual Sharper Image type stores in upscale shopping areas. I was in San Francisco last month for a business trip and walked by one in the Union Square area. You can’t buy a Ferrari there, or even see one … other than die cast, plastic, or radio controlled toy ones. They had a 1:1 scale F1 car model in the shop, but no real cars. More logo-splattered merchandise than you can imagine though. Think of it as Prada for men with more money than sense.
I’m not all that attracted to Ferraris to be honest, as I think only a handful of them have ever been attractive, and all of those from before 1971 when Il Commendatore stepped down from running the show. They’ve become a brand more than a car company, and these stores are the pudding.
–chuck
What is that thing? A Ferrari Sport Model garden tractor?
Would be interesting to know exactly how much from this profit comes from cars and how much from other merchandise.
I heard once that the Ferrari F1 team was actually the only F1 team to make money from its operations, spending about $400MM a year and getting $800MM a year in revenues from merchandise, TV-rights, prize-money etc. I guess however that statement was a bit of a stretch.
However, if you divide that profit just by #cars sold it would be about $66K/car…
Say what now?
It looks like it has bike pedals — my 7 Y.O. grandson would go ape!
Yep — see http://www.ferraristore.com/Plushes—Toys/Ferrari-FXX-Racers-Exclusive-pedal-Go-kart/p,shop.flypage/pid,20325/cid,28/
$437.7M/6587 units delivered =$66,449 profit per car.
I don’t care how much marketing fluff they have, that is freaking brilliant business…
The branding and licensing arrangements that Ferrari and Harley-Davidson both have are the envy of the automotive businesses. No one comes close, and it’s certainly helping them out.
$66,449 – so that works out to be a 20% margin? So, if they sold 612 Scaglietti’s at cost they would only be $249,670.40.
Sweet!
The funny thing is when you look at BMW or Mercedes not to mention Honda or Toyota – even during the good times, the car biz is a LOW margin business.
Percent growth can be used to cover a multitude of sins. What percent of their revenue or [or profit) came from the different (esp Acer) ventures?
Regarding Ferrari’s F1 budget, three years ago, a rep from BBS wheels who’d briefly worked in some indirect connection to their Ferrari sponsorship told me that the budget at that time was around $500 million. That’s a staggering sum of money to go racing. I’ve never been able to figure out how Ferrari could possibly afford that, but I guess it’s making a little more sense.
With current cost-cutting, I’d guess it’s dropped some.
Looks like a lot of that is from selling Ferrari high heels and the like (see the “Autoblog fetish” story). Good business if you can manage to find suckers with money to spend.
Disregarding the knicknacks for a while, Ferrari actually have/had quite a cushion of dealer markups to fall through before demand drop start affecting the mother ship. Especially with the 430.
I bet the dealers are not all fairing as well as previously. Anectdotally, it is currently a ‘good’ time to get a, relatively speaking, ‘deal’ on one.
The old man sold road cars to go racing, the Ferrari company now goes racing to sell Ferrari branded merchandise. Fila sells hundreds of millions of dollars worth of apparel alone. Rod Panhard’s comparison to Harley Davidson is apt.
Compared to the five figure cost of regular maintenance on a Ferrari, the expensive toys at a Ferrari retail store are cheap. The retail stores also allow Ferrari to sell the brand at a lower price point than $180,000. They can sell something to all the wannabe tifosi and if the goods are upscale enough, they haven’t hurt the brand. Ferrari’s already whored out their logo to plenty of licensees, so they don’t have to make anything themselves to stock the stores.
I’m pretty sure that it was Porsche and Porsche Design that first started marketing a car brand for non-automotive products.
Now, merchandising is so important that Lamborghini held a fashion show for Lambo apparel at the NAIAS media preview last month.
It may offend purists, but it’s smart business. If you can only build a few thousand cars a year, and you have a brand that is recognized by billions around the globe, might as well try to capitalize on that brand’s value.
Quote Ferrygeist: “Regarding Ferrari’s F1 budget, three years ago, a rep from BBS wheels who’d briefly worked in some indirect connection to their Ferrari sponsorship told me that the budget at that time was around $500 million. That’s a staggering sum of money to go racing. I’ve never been able to figure out how Ferrari could possibly afford that, but I guess it’s making a little more sense.”
The simple answer is…Sponsorship…Shell sponsorship alone pays most of their F1 bills.
The simple answer is…Sponsorship…Shell sponsorship alone pays most of their F1 bills.
Nah ah.
Marlboro (or whatever the parent company is called these days) is still their biggest sponsor, eventhough their name isn’t on the cars anymore, not even at the handful of races were it would still be allowed to be. They have the barcode there instead and pay about $100MM/year untill 2011 for it, if I’m not mistaken. They actually renewed that deal after 2006, when it was already clear that tabacco advetisement wouldn’t be allowed any longer.
Shell has been another big sponsor for years but not nearly as big as Marlboro, and you have to keep in mind that some part of Shell’s sponsoring isn’t cash in hand but service/pertol/oils and development of those. How these costs are factured in exactly nobody knows.
Anyway, it will be somewhat less, but $400MM a year, that’s $20MM a race for 1 team. For that kind of money you can be the top-team in Indycar for a whole year.