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Luca di Montezemolo, who has headed up Ferrari for over two decades and presided over record profits, has stepped down amid in-fighting with Fiat head Sergio Marchionne.
After joining Ferrari in the early 1990’s, di Montezemolo led a campaign to revitalize Ferrari, bringing in a lineup of vastly improved products and putting their Formula 1 team back on the road to success. Under his stewardship, Ferrari dominated the latter half of the 1990’s and early 2000’s, with Michael Schumacher, Ross Brawn, Rory Byrne and other motorsports all-stars working as one of the most dominant Formula 1 outfits in history.
In addition to their on-track success, Ferrari also found great financial success in the now ubiquitous merchandise licensing deals that were spearheaded by di Montezemolo, which has allowed Ferrari to maintain a lucrative revenue stream despite capping production of the cars at 7,000 units annually.
But that wasn’t enough for Marchionne, who publicly criticized di Montezemolo’s performance in Formula 1 this past week. Speculation is rife that Marchionne wants to expand Ferrari’s production volumes to help it compete with Lamborghini, which many fear would dilute the brand’s exclusivity.
On the other hand, the departure of di Montezemolo, who is credited with introducing milestone vehicles like the 355 (which replaced the dreadful 348), is being seen as a turning point in the brand’s history. Marchionne has never had experience running any premium brands, and Ferrari is one of FCA’s few profit centers. But many fear that this delicate balance will be permanently disrupted.
Hmmm…I smell a Ferrari SUV in the pipeline…
Oh, you mean the 458 Trailhawk SRT Hellcat?
Just asking – why was the 348 so bad? I mean, it wasn’t as beautiful as the 308 or even the 328, but it certainly was faster and seems more reliable …
It’s no longer being sold and advertised. And has secondhand prices too low to appeal to potential buyers of the current lineup. Hence, expendable.
In my 5 minutes or so of googlefu: Wonky electricals and gearboxes that seem to self destruct. Otherwise they seem like any other exotic car from that period.
Wow, that is one rather bitter way of looking at things.
Montezemolo would not last forever. Ferrari is a scuderia that sells cars and merchandise; the scuderia has been struggling since 2009. Montezemolo once was able to bring in the likes of Jean Todt, Rory Byrne, Ross Brawn and Michael Schumacher, but not anymore. For how long can Ferrari look this ridiculous at F1 without tarnish the brand itself?
As for Sergio, word on the street (the F1 paddocks, that is), according to Flavio Gomes and Joe Saward, is that Matiacci will be CEO and Ross Brawn might step into Gestione Sportiva. Looks like Sergio took over on interim basis, probably because Ross Brawn is still to give a final answer.
Ferrari possible brand dilution has been discussed since when Fiat first stepped in, way back in late 1960’s. Yet Ferrari still is what it is. Maybe it is time for a chill pill. Even Lamborghini-like production figures wouldn’t hurt the brand.
Would you really characterize fourth (nearly third) in the constructors’ standings as looking “ridiculous” in Formula 1? In a year of massive technical change, were they actually expected to compete well with Mercedes drive train development? I don’t think they have anything to be ashamed of so far on 2014.
Keep in mind that this year’s F1 homologation rules don’t allow for much development of the motors during the season. Normally, Ferrari would have been able to reroute their turbo to catch up with Merc’s power. But not this year.
Getting rid of Montezemolo could also very well be about his refusal to let company become a higher volume brand that also markets an SUV. Poor F1 performance is the marketing reason for letting Luca go, but business differences are the hammer.
This was the dumbest part of the new rules. How can the engine manufacturers be prevented from development on their brand new engines? The original engine freeze was dumb. This one was just plain lunacy. All it leads to is all the R&D money being spent on aerodynamics and causes these cars to be sensitive to the slightest air disturbance and makes any racing real difficult. Luca was the only person in F1 to be pointing this out, and without him I see things getting worse.
The engine development freeze of the last decade was due to the financial crisis and the engine manufacturers leaving F1 at a frightening pace: Ford, BMW, Honda, Toyota.
I agree that the current brakes on the engine development make even less sense.
They can develop the current engines as much as they want within the confines of the rules, but they can only homologate the changes once per season. The old homologation rules did not allow for any changes other than reliability upgrades, and the engines were performance balanced until roughly equal. Naturally, the old 2.4L V8 rules favored teams with aerodynamics experts and chassis-building guru.
You’ve allowed the poor V6 aesthetics to convince you that the engine rules of today are worse than the 2009-2013 engine rules during the global credit crisis. Not particularly brilliant.
It’s not just this year. The last few years when Vettel was running away with everything, even McLaren seemed more competitive than Ferrari, despite Alonso driving his heart out.
One frightening thought is, just try to consider where would Ferrari be in 2010-2014 if instead of Alonso-Massa or Alonso-Raikkonen pairings, they kept the duo of world champions Massa and Raikkonen?
Conclusion, whatever Ferrari has accomplished in the last five seasons, however little it may be, is still largely thanks to Alonso. It amazes me how he always found the motivation to drag that car to positions where it was not meant to finish, knowing beforehand he can’t challenge the front runners most of the time.
For Ferrari standards and expectations? Yes. Ferrari is the self-proclamed pinnacle of OEMs and racing teams. Fourth is embarrassing. They have the biggest budget, and they get more money than every other team from FOM.
Considering Ferrari’s F1 results for most of the 80s and 90s, they’ll be just fine.
Ferrari was the laughing stock of the grid in the first half of 90s. It was in a true crisis. If Ferrari manages to slip down to those lows, it would be truly embarrassing. Well, so far this year they’re already on their way to a winless season, together with McLaren, reminding of some depressing years of the Alesi-Ferrari era.
You don’t think Ferrari has anything to be ashamed of this season? Just LOL. Falling to 4th in the WDC, just behind the Williams is nothing to be ashamed of? And this is while employing possibly the fastest, most complete and well rounded driver of the grid.
Higher production has certainly hurt the cachet of Lamborghini. They’re just another car now, judged solely on merit versus Audis, MBs, jags and the rest. Going from homebuilt to Audi like reliability has helped drag then in the opposite direction, but their ability to “charge more for the same” is long gone.
As long as higher F production gets routed to new markets, it may not be a big deal. But with the reverse Robin Hood policies followed in the west, more and more purchasing power is being concentrated in fewer and fewer hands. Hence, more and more profit potential is moving to the LaFerrari end of the scale. Today, even the 911 buyers are being taxed to fund the Veyron buyers. Tomorrow, even the 458 buyers will be slaughtered on the altar of easy money for those owning multiple Jets. Whatever F does, it should avoid losing it’s unique opportunity to capitalize on this development.
I’m gonna have to disagree there champ. The sight of a Lambo on public roads is still an event, even in an ultra-jaded city like NYC.
But there’s a bigger issue here, which I will address in its own thread…
How has higher production hurt Lamborghini? Outside of ‘enthusiasts’ (you know, the people who bitch about not having a manual transmission and don’t have enough money to buy a model of the car, let alone the real thing) it seems that VW couldn’t be happier having a Prestige brand dedicated to cars that move at roughly twice the price of their higher end Audi’s. Hell, it’s extremely difficult to argue with raw sales figures in terms of business success, and even the residual market value (something most manufacturers don’t care about) is extremely high in a post-Gallardo world.
You could say the same thing about Rolls Royce post-BMW ownership, and pretty much everyone involved in that organization could not be happier about the potential ‘Loss of Cachet from Higher production.’ When Hanes took over Coach, there was a lot of noise and static, but then the brand experienced unprecedented growth and profits. The key is to have an outlet so that you don’t become so mainstream that it affects the perception of your high end, and being part of the FCA umbrella means that Ferrari never has to consider how to make money on a Boxster-level car.
Ferrari can’t keep up technologically with companies like McLaren or even Mercedes, their current road cars sales are almost entirely image driven (and that Image is circa 2001 Ferrari, not 2014…) and Luca is not well known for being forward-thinking and agile. If this move means less assholes walking around in Ferrari-logo shirts and shoes, and more Winning and Awesome cars (that stand on their own without bullshit review interference) then so long Luca – go jump in a lake with Danny Bahar.
Lambo sells about 2000 cars a year, while Ferrari is at 7000. In fact, I think it’s fair to say that it’s much easier to see a Ferrari on the road in my neck of the woods than a Lamborghini. I think what hurts Lambo more is the kind of reasons people tend to buy their cars. It’s a show-off brand car, usually bought for the outrageous looks and the number of cylinders. On the other hand, Ferrari cars not only look outrageous and expensive, but the brand has a real racing cred to back their reputation, in both F1 and sports cars.
This was a big news point at the F1 broadcast this past Sunday. And Alonzo’s finish didn’t help in the slightest. At the home race. In front of all the tiofsi.
Not sure where folks got the idea that Ferrari will be “ramping up” volume to match Lamborghini. Lambo moves about 2,000 cars a year worldwide.
http://www.volkswagenag.com/content/vwcorp/info_center/en/news/2014/01/Lamborghini_AaK.html
Ferrari’s 7,000 cap is not far off from Bentley’s sales, which hit 10K last year.
http://www.autonews.com/article/20140109/RETAIL01/140109859/vw%E2%80%99s-audi-porsche-bentley-report-record-sales-in-2013
But for some reason, I feel like I see Bentleys everywhere, whereas I hardly see Ferraris anywhere. Maybe Bentleys just lend themselves to every day use more than Ferraris.
In any case, while I don’t really like Marchionne and his perpetually changing 5 year plans, I don’t think he’s dumb enough to mess with his corporate umbrella’s only cash cow. Plus yea the F1 thing sucks, but IIRC F1 is a big money drain on manufacturers whether they win or lose. Douchebags will still buy Ferrari polos, sneakers and watches regardless of what the team is doing, so that hardly seems pivotal enough to fire the guy who oversaw Ferrari’s return to legitimacy over.
Ferrari buyers tend to own multiple Ferrari’s – I don’t expect the same is true for most Conti GT customers. Stands to reason then that regardless of frequency of use, you would see fewer Fezza’s than Bentleys, much to your loss (I am happy to see a black and red 458 on my way to work ~1 a week :) )
I can see Marchionne pushing sales a little (I think there’s a market for a ‘base model’ California at the $125k mark) but the fears that they’re going to jump any kind of significant volume is absurd. I’m sure that they could move 10k units a year with their current lineup, but the rarefied air they sell in runs out quick when you have McLaren (and even Porsche now) nipping at your heels.
Well, if it is a racing organization, and it is not winning, then something must change. If it is not a racing organization, then it must operate a bit differently from what it currently is.
The thing is, Sergio might push for the V6 Ferrari, to go against the Porsche 911. That could be a major blow for Ferrari as a brand. They would face the same issues raised by TTAC when Porsche was getting the Macan ready – bigger volume, possible quality issues while dealing with different clients. It is not just about sheer volume, but the kind of product Sergio might want from Ferrari.
But I don’t think he is that stupid.
He could call it Dino.
BTW, these Dino’s really suck on the resale value.
Meanwhile, at Maserati.
*tumbleweed rolls past.*
My bet is that old Sergio screws this up.
I hope the main argument turns out being Sergio’s demand to offer manuals again.
This whole exercise will be a great test on whether the ravings of Peter de Lorenzo are accurate or the delusions of an egotistical nobody
First of all, I’m not Peter M. DeLorenzo, nor do I play him on the internet, but I think he’s onto something with his Marchionne rants. It’s not hard to find examples of Sergio’s incredible chutzpah. What I find sad is that Agnelli scion, John Elkann, seems to think Sergio is a savior.
Ram 2500 Mille Miglia?
Ferrari 458 Hellcat?
Luca di Montezemolo steps down? Looks more like he was pushed down the steps.
NeilM, I agree.
I think it is all about power. Power to control all aspects Fiat’s assets. Power to control the purse strings. Power to determine Fiat’s destiny.
And I have to admit that if viewed from that perspective, Sergio Marchionne is my hero. The way Sergio marginalized the UAW re the Chrysler acquisition for ultimate control was truly masterful. Nary a peep out of the UAW since.
And what Sergio has done with the carcass of Chrysler since taking it off the hands of the US taxpayer certainly has been profitable for Fiat and I dare say the customers as well.
My guess is that the world will see some radical changes at Ferrari in the immediate future just like the world witnessed some magnificent changes in Chrysler products when Sergio started calling all the shots.
Were I a betting man, I’d put my money on Sergio to take Ferrari further, faster.
Sergio did none of that with Chrysler, he just jumped in at the right time and took credit for others’ work that would have panned out if the feds hadn’t sold out Chrysler.
Success has many fathers. Failure is an orphan.
Sergio was there at the right time. He gets the credit.
sounds like 2 boys got into a pissing match and the boss won. hardly a surprise but still newsworthy for those who follow the prancing horse.
I don’t know a single person that owns a Ferrari that cares about F1 racing or how Ferrari does in it. I could not imagine someone lusting their whole life and working for years to own a Ferrari to all of a sudden change their mind because it was not the best in F1 racing either. If you make any kind of huge money, whether it be lottery, pro-athlete, CEO, whatever, your go to first big purchase will likely be a Ferrari or Lamborghini, even before a big house.
I think you do not realize that Ferrari’s F1 team exists to make money, a lot of it, rather than simply to promote Ferrari’s road cars. Companies like Mercedes started racing in F1 in order to promote their road cars, but for Ferrari it was the reverse. Ferrari started as a successful Formula 1 and sports cars racing factory and team, and only after having established itself as a successful Formula 1 team they started selling road cars. And in fact, originally the reason to sell road cars was not to make money, but to sponsor the racing operation. Even today Ferrari makes a profit off its racing in F1 rather than simply treating F1 as some kind of money losing marketing tool to promote its road cars.
That and selling keychains, T-shirts and hats! ;)
I have highest regards for Marchionne, but this will be his Waterloo. You don’t mess with one of the world’s most recognizable brands over an ego conflict with di Montezemolo.
I do not believe Sergio is messing with the brand. I believe Sergio will take the brand further, faster.
Anyone who has ever studied Sergio Marchionne, the man, would realize that this guy does nothing without ponderous forethought and tedious prior planning.
If you can, watch some of the videos featuring Sergio conducting tours of Fiatsler facilities for auto journalists after the bailouts, and taking questions, offering off-the-cuff answers.
This guy knows his stuff and it got me to spring for a 2012 Grand Cherokee.
Marchionne’s fastidiousness is the primary reason I respect him; however, his strategic vision appears to be non-existent. He’s not the first executive to ride the wave of brand dilution to the top, but he doesn’t appear to have anything else to offer. Dilute Jeep until it is debauched offroading kitsch. Dilute Maserati, which makes sense, to be fair. Dilute Ferrari because you covet Porsche’s income statement.
If he does dilute the Ferrari vehicle lineup, he will be seen as a one trick pony. As another poster opined, Peter de Lorenzo will be proven correct. Marchionne has nothing to add in an executive capacity. He is just another operations manager who counts beans and destroys brands.
TW5, you could very well be right. This is such a dynamic and ever-changing business, especially when it comes to the specialty brands like Ferrari, Porsche and other exotics well out my reach. I am not qualified to forecast future demand or profitability.
But I do see this as a consolidation of power for Sergio. He’s done pretty good so far, but there is always the possibility that he will stumble because of a misinterpretation of the facts available to him, or changes in demand in the market.
But because of Sergio’s track record so far, I am willing to give him the benefit of the doubt. If he succeeds and attains the goals he set, he will be hailed as a hero, even by his detractors.
If he fails, a lot of people will jump up and say, “Aha! I told you so!”
As much as I find the current CEO of Ferrari ‘molto simpatico’, the 2018 deliverables are 100% Sergio’s responsibility. The utilization of resources are an important key to achieving those goals. I can’t think of a more appropriate person than Sergio to spearhead the project. I believe he’ll take Ferrari to heights never imagined and will do it without diluting the brand’s prestigious reputation. Best of luck Sergio. Luca, wish you all the best and hope you may be able to work some magic for Alitalia.