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Ferrari's financial health

Started by Eastern , Jun 29 2008 03:35

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30 replies to this topic

#1 Eastern

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Posted 29 June 2008 - 03:35

There's a very nice article in today's Telegraph business section on how Ferrari's fortunes were turned around on the track, and on the balance sheet, since Monty took over the management.

One thing is particularly interesting: I had always assumed that Ferrari F1 had financial support from Fiat, but according to Monty this is absolutely not the case.

The money for F1 racing comes from Ferrari and its sponsors. "We do not get a penny from Fiat. I don't think people always realise this," Montezemolo said. "For a small company like us, the achievement, is particularly impressive."

In the dog days of 1993, Ferrari made operating losses of €3.8m (£3m) on turnover of €230m. Last year, operating profits were a record €266m, on sales of €1.67bn.

That's a pretty impressive thing for Monty to put on his CV.

#2 pingu666

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Posted 29 June 2008 - 03:58

shows how much theyve grown, 230million is less than what they spend on f1 per year now...
how many cars did they produce last year?

#3 quasi C

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Posted 29 June 2008 - 08:22

around 6K. Unfortunately that's going to grow to around 9-10K in the next few years to accomodate the launch of the california, indeed they are building a new factory at Maranello. Di Montezemolo said the increase will be mainly swallowed up by emerging markets in order not to sully the brand in europe and america. I'll believe it when I see it. 430's are still going for ridiculous premiums and that's all part of the Ferrari exclusivity. It's the way it should be.

AFCA also reported that they will build a new 1:1 wind tunnel (remember the vibrating road they were supposed to build??) and re-do the f1 design offices (GeS). Should be cool to visit

edit - actually the article expands on what i was saying. well worth a read.

#4 carbonfibre

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Posted 29 June 2008 - 09:11

Originally posted by Eastern
There's a very nice article in today's Telegraph business section on how Ferrari's fortunes were turned around on the track, and on the balance sheet, since Monty took over the management.

One thing is particularly interesting: I had always assumed that Ferrari F1 had financial support from Fiat, but according to Monty this is absolutely not the case.

That's a pretty impressive thing for Monty to put on his CV.

The FIAT support i believe has been gone for quite some time already.

The fact that Ferrari still run the Fiat logo is just because it's their mothercompagny. Nothing more then that. Back in the early 90's it might have been the case though.

#5 kar

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Posted 29 June 2008 - 09:30

It's interesting in a way Ferrari spend not a cent on advertising but rather on F1.

Ferrari's off track fortunes have pretty much mirrored their on track ones. I know with all the political mess that is going on now there are lots of things being said. But that F1 has become such an effective advertising vehicle, at least for Ferrari, is quite something.

#6 y2cragie

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Posted 29 June 2008 - 09:36

I'd argue the point as to who turned them around, I'd say it wasn't monty on his own.
Owning a ferrari became "cool" again when they started winning. Which came down in no small part to the 4 guys who brought those wins. Schumi, brawn, Todt and Byrne.
It would be interesting to note how many cars they sold in germany france and britain in that time then see what the increase was over the time when they wern't winning the year or two before hand.

I could see the same thing happening for Mercedes in Britain now with Lewis mania.

#7 Josta

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Posted 29 June 2008 - 10:22

Originally posted by y2cragie
I'd argue the point as to who turned them around, I'd say it wasn't monty on his own.
Owning a ferrari became "cool" again when they started winning. Which came down in no small part to the 4 guys who brought those wins. Schumi, brawn, Todt and Byrne.
It would be interesting to note how many cars they sold in germany france and britain in that time then see what the increase was over the time when they wern't winning the year or two before hand.

I could see the same thing happening for Mercedes in Britain now with Lewis mania.

I think the fact that 1993 was in the middle of a global recession when people didn't have the money to spend on supercars has a bit more to do with it.

#8 Lifew12

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Posted 29 June 2008 - 10:27

Originally posted by kar
It's interesting in a way Ferrari spend not a cent on advertising but rather on F1.

I've seen Ferrari adverts kar. I used to see plenty in the 'states. The name is all, though, isn;t it....

#9 rolf123

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Posted 29 June 2008 - 10:33

Originally posted by Josta

I think the fact that 1993 was in the middle of a global recession when people didn't have the money to spend on supercars has a bit more to do with it.

Admittedly I was at school at the time but I don't remember this event?

#10 Josta

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Posted 29 June 2008 - 10:52

Originally posted by rolf123

Admittedly I was at school at the time but I don't remember this event?

You are very lucky then. Basically it was a typical boom - bust scenario. Taking Ferrari as an example, in 1991 they sold 4800 cars, in 1993 they sold less than half that amount. Every sector was feeling the bite, but supercar companies feel it more than most.

#11 Chiara

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Posted 29 June 2008 - 10:53

First Ferrari I fell in love with was the F355 - built in 1994 :love:

nothing to do with Schumacher ;)

If I got offered any of their road cars....I'd still take that one in a heartbeat.

#12 potmotr

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Posted 29 June 2008 - 11:23

Originally posted by kar
It's interesting in a way Ferrari spend not a cent on advertising but rather on F1.

I think with such a brand of desire advertises itself in many ways. People see a Ferrari on the street and want to aspire to having one. It is interesting the Red Bull didn't advertise in traditional mediums for a long long time either, preferring to spend its marketing budget on sports sponsorship. Red Bull has some TVCs and magazine spots, but the vast majority of its spending is still on sponsorship. I read somewhere that, as a percentage of Red Bull's marketing budget, its motorsport operations are very small, but hugely effective.

#13 pingu666

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Posted 29 June 2008 - 12:46

i think they like to sponser edgy events, and cos the boss just likes something so he pumps money into it

#14 Beedeeai

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Posted 29 June 2008 - 14:38

Montezemolo didn't even mention interview perhaps one of the most impressive aspects of its recent performance (modest maybe?!) which is that the 2007 operating profit was the biggest increase in the past three years:

2004: €138m
2005: €157m
2006: €183m
2007: €266m

Not bad in its WC-winning year!

#15 BuonoBruttoCattivo

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Posted 29 June 2008 - 14:44

Originally posted by rolf123

Admittedly I was at school at the time but I don't remember this event?

Well, don't worry, you will experience this coming one. :up:

#16 SeanValen

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Posted 29 June 2008 - 14:52

Originally posted by potmotr

I think with such a brand of desire advertises itself in many ways. People see a Ferrari on the street and want to aspire to having one. It is interesting the Red Bull didn't advertise in traditional mediums for a long long time either, preferring to spend its marketing budget on sports sponsorship. Red Bull has some TVCs and magazine spots, but the vast majority of its spending is still on sponsorship. I read somewhere that, as a percentage of Red Bull's marketing budget, its motorsport operations are very small, but hugely effective.

1980s
American tv shows
Magnum
And Miami Vice, sported ferraris

Infact Ferrari Testarossa which featured in Vice, put Ferrari on the map like never before in the US. Ferrari giving rights to use their cars on shows was one if the best moves.

I love the Testarossa myself, especially the updated ones, all time favorite

#17 Bernd Rosemeyer

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Posted 29 June 2008 - 19:51

Wasn't there also a vice Ferari Daytona? Wasn't that even a replica?

#18 ray b

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Posted 29 June 2008 - 20:42

TV and movie people like to have back ups in case something happens
and need them all to look exactly the same
the vice Daytona was a plastic body on a vett

#19 antrock

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Posted 29 June 2008 - 20:50

there is a rumor saying that when enzo learned about the fake daytona, he sent couple of black testarossas to the miami vice production guys. they repainted them white so they would look better in the night shots :cool:

#20 black magic

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Posted 30 June 2008 - 02:59

montazemelo in a speech he gave at a meeting repeated his assertion that ferrari do not want to ever meet demand as a deliberate part of their marketing strategy. he was specific that he wanted every buyer to have to wait and want a car rather than just turn up and have it.

only 55 sold to italians, rest exported. sold 100 ferraris to china last yr.

#21 Lazarus II

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Posted 30 June 2008 - 04:11

Originally posted by Chiara
First Ferrari I fell in love with was the F355 - built in 1994 nothing to do with Schumacher ;)

If I got offered any of their road cars....I'd still take that one in a heartbeat.

Careful - they have a real penchant for catching fire rather easily.

#22 Nobody

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Posted 30 June 2008 - 05:11

Originally posted by Eastern
There's a very nice article in today's Telegraph business section on how Ferrari's fortunes were turned around on the track, and on the balance sheet, since Monty took over the management.

One thing is particularly interesting: I had always assumed that Ferrari F1 had financial support from Fiat, but according to Monty this is absolutely not the case.

That's a pretty impressive thing for Monty to put on his CV.

From the Ferrari website:

Under Formula 1 > Partner > Sponsor >

FIAT:
Fiat is Ferrari's major shareholder. Fiat provides mainly technical support, and Ferrari has access to the company's Research Centre which is extremely advantageous when undertaking development in various fields. Michael Schumacher also acts as Fiat's testimonial for its products.

Nice one Monty :rolleyes:

pull the other one.

Fiat don't give Ferrari any cash - they own it.

Any losses this "little company" makes, Fiat just swallow up by selling more Puntos of whatever. Any profits are divided in turn.

#23 MikeTekRacing

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Posted 30 June 2008 - 08:00

except that there are no losses from ferrari

#24 Nobody

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Posted 30 June 2008 - 09:17

Originally posted by MikeTekRacing
except that there are no losses from ferrari

Marlboro smokers make sure of that. :smoking:

#25 Hippo

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Posted 30 June 2008 - 09:20

Originally posted by MikeTekRacing
except that there are no losses from ferrari

Not right now. But there will be times again, when noone cares for F1. Then this little company will feature losses again. And if it wasn't for FIAT this little company would just disappear.

Also if they go on increasing the numbers of cars they produce like they plan, they'll soon get into trouble too. Audi's approach with Lamborghini is better imho. Exclusiveness is a key factor to by such a car after all.

#26 MikeTekRacing

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Posted 30 June 2008 - 09:26

I am sure Ferrari's management know nothing about the best approach.
The point is they make profit and don't take a penny from FIAT. They support themselves and have a huge budget at the same time for the F1 business. It's pretty remarkable for a small company.

#27 Dick_Dastardly

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Posted 30 June 2008 - 12:46

I suppose it helps to balance the books when your support can be bought by Max and Bernie for $100 million........

#28 MikeTekRacing

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Posted 30 June 2008 - 12:54

yeah...like this has anything to do with it
but nevermind posting stuff relevant, keep throwing sh*t

#29 mursuka80

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Posted 30 June 2008 - 14:11

Originally posted by Dick_Dastardly
I suppose it helps to balance the books when your support can be bought by Max and Bernie for $100 million........

Cry me a river,(baby go on and just)cry me a river :lol:

#30 JForce

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Posted 30 June 2008 - 15:07

Originally posted by Hippo
Audi's approach with Lamborghini is better imho.

Bastardise the models, chopping and changing as they see fit? No thanks. A Lamborghini is hardly exclusive when anyone can go buy an R8.

Anyway, it's a slightly different market. People who buy Lambo's aren't generally going to buy Ferrari's anyway. A Lamborghini is as much about saying "Look at me and how rich I am" as it is about the car. Will be interesting to see what Porsche ownership does to them.

#31 Nobody

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Posted 30 June 2008 - 23:36

Originally posted by MikeTekRacing
I am sure Ferrari's management know nothing about the best approach.
The point is they make profit and don't take a penny from FIAT. They support themselves and have a huge budget at the same time for the F1 business. It's pretty remarkable for a small company.

You (and many here) are underestimating what Fiat's role here is.

They don't take a penny from Fiat because they are Fiat. They support themselves with the collaboration of Fiat - it says as much in the quoted paragraph above.

Fiat owns 90% of Ferrari.

From Wikipedia:

Fiat Group is the largest automobile manufacturer in Italy, with a range of cars starting from small Fiats to sports cars made by Ferrari. Car companies includes Fiat Group Automobiles S.p.A, Ferrari S.p.A., Iveco S.p.A. and Maserati S.p.A.. The Fiat Group Automobiles S.p.A consist companies: Abarth & C. S.p.A., Alfa Romeo Automobiles S.p.A, Fiat Automobiles S.p.A, Fiat Professional and Lancia Automobiles S.p.A. . Ferrari S.p.A. is owned by the Fiat Group, but is run autonomously.

Financially, Ferrari profits are counted within Fiat revenue.