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Ferrari's Wild Success as a Luxury Fashion Brand

"We are not an automotive company," says Ferrari's CEO.


Ferrari F80
F80 | Ferrari

With a list price of $3.7 million, Ferrari’s new “hypercar” was revealed to the public in October with a twist: It wasn’t available for sale. All 799 units of the low-slung, high-haunched F80 model - the most expensive production vehicle in Ferrari’s history - had been promised to top customers.


These days, the reality is that money isn’t enough to buy a top-of-the-range Ferrari, says the Wall Street Journal. You need to be in a long-term relationship with the company.


By leveraging the extraordinary fandom of its customers through a business model based on uber-scarcity, the storied Italian company is enjoying a new golden age. Following an almost tenfold increase in the stock since its initial public offering almost a decade ago, Ferrari is now worth $90 billion, making it the most valuable car company in Europe - despite delivering just 13,752 vehicles last year.


By comparison, Volkswagen sold over 9 million cars last year and has a market capitalization that is roughly $40 billion lower.


Like Tesla, which became the most valuable U.S. carmaker by attracting a tech-company valuation, Ferrari has won the European prize by channeling similarities with a more reliable peer group: French handbag makers.


“We are not - we are not - an automotive company,” said Chief Executive Officer Benedetto Vigna in a recent interview in Maranello, the city in northern Italy where Ferrari is based. “We are a luxury company that is also doing cars.”


At the time of Ferrari’s IPO in 2015, the Italian company declared that it would follow a luxury business model and many analysts were skeptical that it would work. But it most definitely did work.


Former CEO Sergio Marchionne used to draw comparisons with Hermès - a parallel now widely accepted. The French fashion house limits supply of its coveted Birkin handbag, leading to waiting lists at its stores and a huge resale market. Customers buy all manner of other Hermès baubles to move up the list.


Ferrari’s blossoming into a luxury leader has restored the fortunes of founder Enzo Ferrari’s son, Piero Ferrari, and Italy’s Agnelli family, which took control of the company decades ago through its Fiat brand. In the IPO, both families retained stakes that are now worth billions of dollars.


Enzo Ferrari, formerly a salesman and racing driver for Alfa Romeo, founded Scuderia Ferrari, a racing team, in 1929.

 

World's oldest road going Ferrari


 
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