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Ferrari as recession-proof as it gets

Defying the trend: Melbourne's new $30m Zagame Ferrari dealership.

Global economic downturn fails to impinge on Ferrari's super-wealthy clientele

Ferrari logo27 Oct 2008

By DAVID HASSALL

WHILE car-makers around the world struggle with the reality of tightening credit markets and falling sales, Ferrari does not foresee a decline in its customer base, sales or even future order banks.

The president of Ferrari Asia Pacific, Marco Mattiacci, told GoAuto last week that there are still a huge number of what he describes as “the super-wealthy” who will continue to buy high-end luxury products like Ferraris and Maseratis.

And Neville Crichton, the head of Ateco Automotive Pty Ltd, which owns the local franchise for the Italian brands through its European Automotive Imports division, said there have been no cancellations within its long order-bank and no sign of a let-up in demand in Australia.

“I don’t think anything is recession-proof, but I think that, out of all motor vehicles, it’s as close it as you’d possibly get,” Mr Crichton told GoAuto.

“We’ve certainly lost the odd deal, but they aren’t asking for their deposits back. They may delay delivery by six months or something, but I don’t think we’ve had anybody come in and say they want their deposit back.”

Latest figures show Ferrari recorded € 450 million in revenues ($A930 million - up 22.3 per cent year-on-year) in the third quarter of 2008, and a trading profit of € 79 million ($A163.4 million or 17.6 per cent of revenue), to be up 41.1 per cent on Q3 2007.

The Asia-Pacific region has been a huge success for Ferrari since company president Luca di Montezemolo decided to establish a regional office in Shanghai five years ago to cash in on the boom in China. That office now numbers 60 people under Mr Mattiacci.

This year, China finally passed Australia as the region’s second-largest country in terms of sales, but both trail Japan, where the factory has taken over the franchise and increased sales by 40 per cent last year and another 25 per cent this year.

“Up to now, we don’t have it [the global economic downturn],” Mr Mattiacci told us. “The situation is not comparable to the US or Europe.

 center imageLeft: The president of Ferrari Asia Pacific, Marco Mattiacci and the Ferrari California.



“The three biggest markets we have are Japan, China, Australia, and we do not have this kind of situation. It is a market we have followed very carefully and there has been a growth in the last three years.

“First of all, we are referring to super-wealthy people. In China there are 320,000 millionaires [in US dollars] – a lot of people who have made a fortune very quickly – and in Japan there are 1.2 million millionaires.

“We cannot close our eyes. We see what’s going on, but Ferrari is talking to super-wealthy customers.

“I just came back from a [month-long] tour of Asia and our customers were not discussing what’s happening in the market, but what their next Ferrari will be. This was the discussion – ‘Tell me please what is coming to the market next year’.

“The growth of the wealth in the region, plus the fact that we were not present before, has given the opportunity to build a platform to sustain our growth.

“Our main goal is to make Ferrari the most exclusive manufacturer in the world. We’re not just focusing on the percentage growth.

“We have invested heavily in order to make the network very strong and we invested a lot in the marketing in order to make the product knowledge in the region stronger than before, so we set the fundamentals and we took a competitive advantage over all the other competitors.

“Japan is a most wealthy, knowledgeable customer base. It is the second-biggest economy in the world, the top luxury market in the world, and there is still potential there.

“In the last year there has been an incredible growth in wealth all around Asia and we are here basically to capitalise. Asia is in a much better position than in the past. There is a huge untapped amount of wealthy people still to talk to about our products.”

Despite the well-reported problems with its economy and the fact that only about 30 Ferraris were sold there last year, Mr Mattiacci believes that the South Korean market is “the best-kept secret in Asia” and “a big opportunity” because there are a huge number of the super-wealthy there.

He was less animated in his assessment of the Australian market, but is nevertheless confident that Ferrari will continue to grow, even if the overall market slides.

There are long waiting lists on most Ferrari and Maserati models, and the Australia-New Zealand order book for the forthcoming folding-hardtop California convertible has pushed past the 200 mark after a further 10 were taken at the recent Sydney motor show. The California waiting list now stands at 18 to 20 months.

“I think the California will offer a great opportunity to target new customers... but we are not focused on simple numbers, we are focused on exclusivity. We can grow even faster, but our goal is to cultivate a very solid clientele, which is why 65 per cent of our customers are repeaters,” said Mr Mattiacci.

Mr Crichton agrees that his low-volume, high-demand Italian supercar brands are better-placed to withstand the coming recession than the mass-market brands.

Speaking at the opening of Bobby Zagame’s new $30 million Ferrari and Maserati showroom in Melbourne last week, Mr Crichton said: “If you read the papers today, you wouldn’t be building facilities like this, but it’s a long-term investment.

“There’s no hiding that it’s bloody hard out there at the moment. We all know it’s very difficult, but we’ve still got back-orders on both brands. With Ferrari and Maserati in Australia and New Zealand we’ll probably do 260 cars this year, so that’s up more than double where it was two and a half years ago (when took over).

“We’re only talking 160 people for Ferrari in Australia out of a population of 23 million, so we don’t have to get an awful lot of people to satisfy the limited allocation that we get.

“We all know there’s a lot of money out there it’s just a matter of convincing the people that it’s okay to go and spend it. I think there is a resistance with people that they don’t want to be seen being flamboyant in such difficult periods.

“We’re lucky there is such a pent-up demand. There are many people reluctant to show wealth at the moment, but there are many others out there that are happy to do it.

“I think the economy generally will tighten up a little further and, with the bread-and-butter brands, most of the importers have got too much stock, so I think you’re going to find a lot of discounting of the bread-and-butter lines – but not at the top end.

“Ferrari is not just an automotive brand, it’s basically a religion for the Ferrari owners. I’ve been in the automotive business all my life and I’ve never felt the goodwill that goes with the people who buy the product. We’re not just selling cars, we’re selling a lifestyle.”

Read more:

Italian brands roar into new Melbourne home

Business as usual at the top, says Ferrari


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