The world’s most profitable car company wants to be a handbag company.
Ferrari only makes 13,752 cars a year, yet it’s the seventh largest carmaker by market cap: $110bn vs General Motors at $80bn, Stellantis at $85bn and BMW at $95bn. General Motors made six million cars. Stellantis made 4.7 million and BMW 2.4 million.
Here’s the thing: last year, GM’s net profit margin was 3.2 per cent, BMW’s was 1.2 per cent and Ferrari’s net margin was 23 per cent. This means that for every dollar GM earned in revenue, about 3.2c was net profit. For every dollar Ferrari earned in revenue, about 23c was net profit.
Even the profit margins at Tesla have slipped to 7 per cent as it battles increased competition and so has to keep dropping prices. But, then again, the Muskageddon company still has a market cap of $1.54 trillion, or roughly the same size as Australia’s GDP. Jimmy Chalmers could take some lessons from the Mad Musk.
So how did the 87-year-old company, founded by a man fired from Alfa Romeo, who only ever wanted to make race machines and only made road cars to fund the racing and despised the customers, become one of the most powerful and profitable brands in the world?
When Enzo Ferrari died, his passenger car company was basically bankrupt. It hadn’t won a championship for six years and there was no obvious replacement for Enzo. Owner Fiat turned to Sergio Marchionne, who brought Fiat back from the grave. In 2016, he took over Enzo’s company.
Enzo would have rolled over in his tomba.
The Ferrari prancing horse statue in the company’s home city of Maranello, Italy. Picture: AFP
The Ferrari prancing horse statue in the company’s home city of Maranello, Italy. Picture: AFP
Sergio said double production and, while it was important to win F1 races, it was more important to make Ferrari a luxury brand where scarcity will drive demand, higher prices, higher margins and a higher share price. A share price more like Hermes. Hermes makes Birkin bags. To buy one you have to suck up to the salesperson in the store, buy other Hermes schmutter like scarves and ashtrays and then wait to see if you are allowed to fork out $100k for your bag. Can’t wait? Head to therealreal.com where you can pick up a one-owner, slightly used 2015 Matte Niloticus Crocodile Himalaya Birkin 30 for a lazy $181k or about the same price as a 2025 Chevrolet C8 Corvette Stingray. No guessing what a sane person would choose.
Of course, you can buy a Ferrari today. You walk into the showroom with $500k in the skyrocket and then you wait a year or so. Want a limited-edition model, say the $6m F80 Hypercar? Forget about it. As the WSJ’s Stephen Wilmot tells us: “Collectors had on average bought 10 new Ferraris before qualifying to buy LaFerrari.”
But Ferrari says that making the cut isn’t just about the number of cars in your garage. Or about sucking up to the dealer. The Maranello-based company has a secret client hierarchy. It controls who gets special cars.
Enrico Galliera, Ferrari’s longtime commercial director, told the WSJ it includes “event participation, racing involvement, classic restorations, and more. We track everything.”
That’s why the main driver of last year’s record revenue (and a small pun there) were cars and spare parts: 13,752 cars generated $9.3bn helped by personalised options like a carbon-fibre front end: the LaFerrari offered a carbon-fibre front end, priced at about $550,000.
Like every car salesperson, your friendly Feezer dealer has the extras you need … at a price. You can personalise nearly every bit of your car, from unique colours to custom interiors. The costs for these bespoke features vary based on your choices and wallet size. But quite a few owners spend about $250k on options.
And in 2016 Sergio Marchionne also said we’ll IPO Ferrari, and they spun it out of Fiat as a standalone company.
And in 2021, Ferrari moved into real fashion and schmutter, unveiling its first high-fashion collection. Now it operates boutiques (aka frocks and trinket shops) worldwide. You can grab stuff like: frayed denim mini dresses for $5k, men’s leather ballet flats with laces for only $1500, oversized men’s red shirts that look like a dress for $8k and Chuck Sainz replica helmets (ask what size Chuck’s head was before buying) for $30k.
Ferrari F1 driver Charles Leclerc. Picture: AFP
Ferrari F1 driver Lewis Hamilton. Picture: Getty Images)
And ever wanted to vomit in an F1 car? You can do that here: Ferrari World Abu Dhabi. Wear over-knee shorts and vomit on the world’s fastest rollercoaster, Formula Rossa. Don’t go to the real Italy: it’s full of Italians trying to make Pizza Hut pizza. Explore a mini-Italy at leisure in a small-scale Ferrari 250 GT California, circa 1958. Change tyres and pay to do it. How much fun is that? $150 worth.
Then there’s Ferrari Land in Spain: The theming will transport you to iconic buildings in Italy, which is just up the road from Spain. Forget the rides, there’s Rondò Veneziano: splendid period dresses, classical music and the most exuberant wigs of the 18th century, worthy of Marie Antoinette herself, who I don’t think was Italian. Feel just like you’re in the real Italy surrounded by music and folklore on every corner of the streets of Ferrari Land. Surround yourself with a magical atmosphere and let yourself be carried off to elegant Italy by the travelling shows that recreate Italian folklore and are filled with typical music and entertainment featuring incredible costumes. Very few Spanish drugs are involved.
What about F1?
It’s great for promoting the brand and everything from $6m cars to oversized men’s red shirts that look like a dress, and it makes money. Last year sponsorship and brand revenues were up 17 per cent at $1bn. These include: F1 prize money, sponsorship deals (Shell, Santander, Ray-Ban and Philip Morris.), higher F1 commercial revenues from F1 owner Liberty Media, and a historical bonus from F1 as the longest-standing team.
However, there are the costs of paying drivers. Hamo will be paid $5m a race as a base salary, while potential bonuses and off-track endorsements could see him earn about $200m a year. Feel sorry for Chuck Leclerc, who only earns $53m a year, including super and overtime.
Two weeks ago, I said: “If you’re sensible and have a bit extra, any Lexus (except the SUVs) is a great buy.” I meant to say the big SUVs like the GX and the LX. I also mentioned trying to find a fix for falling Quadlocks. Basically, the answer is, if like me and some other readers you own one, you’re stuffed.
One reason to be in Adelaide on Friday, March 7 is the Celebration of Legends & Performance at Rennen Motorsport. There’ll be some of MotoGP’s most legendary bikes, directly from Tom Dermody’s private collection. And it’s not far to the Kensi.
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