High-flying Ferrari to protect brand by making fewer cars
MARANELLO, Italy (Reuters) - Ferrari will cut production by at least 4 percent in 2013 to preserve the exclusivity of its brand but still hopes to increase profits, its chairman said on Wednesday.
Predicting the Italian luxury carmaker will continue to flourish while the global economic outlook remains uncertain, Luca Cordero di Montezemolo said that, despite growing sales, production would drop to less than 7,000 vehicles.
"The strength not to listen to people who say 'your competitors will benefit from this' is a choice I learned from (company founder) Enzo Ferrari, who used foresight in enhancing the value of the brand," he told a press conference.
The move was also designed to protect the resale value of the company's cars. Ferrari's entry-level California model starts at 185,000 euros in Italy, and its top-range twelve-cylinder F12 costs 272,000 euros.
The luxury carmaker sold 7,318 cars last year and makes an important contribution to owner Fiat's FIA.MI bottom line. For the first quarter, Ferrari earned 80 million euros before interest and tax on 1,798 cars sold, compared to Fiat's 603 million euros on sales of about 1 million vehicles.
Montezemolo said that Ferrari's decision to cut production was "shared" with the company's main shareholders, and comes despite a growth in revenue of 4 percent to 551 million euros in the first quarter. Its net profit for the first quarter was 54.7 million euros.
Ferrari, which competes with Porsche and Jaguar in the market for high performance sports cars, cut production in 2003 for similar reasons, Montezemolo said.
The brand's value enabled it to earn 52 million euros in revenue from 60 merchandising licenses of Ferrari-branded clothes, toys, watches and other items last year, said Montezemolo.
"Ninety-five Ferrari-branded items are sold every minute around the world," he said.
Montezemolo said he believes the group can increase its profit this year despite the production cut. He did not provide forecasts.
He said the company had no plans to hold an initial public offering. Financial analysts have speculated that Fiat could spin off or sell part of Ferrari to generate cash to increase its stake in U.S. automaker Chrysler.
Ferrari plans to invest 100 million in the next 2 years on plant improvements at its factory Maranello, where some 3,000 people work building about 32 cars per day.
On Wednesday, the company unveiled a new assembly line building about 13,000-15,000 six-cylinder engines for its sister brand, Maserati. The engines will power two new Maserati models, the Ghibli and the Quattroporte, as part of Fiat's plan to boost Maserati sales to 50,000 in 2015 from about 5,000 last year.
Ferrari currently has no plans to use the new engine assembly line to build engines for Fiat's Alfa Romeo brand, said head of technology Vincenzo Regazzoni.
The company spent 40 million euros on the new assembly line, and will hire 250 new staff, most of whom will be employed making the new six-cylinder engine.
(Reporting by Jennifer Clark, editing by Antonella Ciancio, John Stonestreet)