An Exclusive Chat with Ferrari's Luca di Montezemolo, the Rock Star of the Automobile Industry - VIDEO ENHANCED
Ferrari's Chairman Talks About Ferrari’s Business, F1, Hybids and the Future
By Marty Bernstein
The name Ferrari, its prancing horse logo and of course those special red vehicles are world famous icons of speed and style. But, Luca Cordero di Montezemolo, the long time chairman of Ferrari, SpA and of Fiat, SpA, has a relatively low business news profile outside the automobile industry.
His name is more familiar on the world’s sports pages with the Formula 1 racing news than on American business pages, which is a slight to this communicative, charismatic and competitive executive. In Italy and throughout Europe, he is treated like a rock star with awe and respect for his business accomplishments and acumen.
A 62 year old Italian with an aristocratic heritage and wide ranging interests, he is an experienced race driver, earned a law degree from the Sapienza-Universitá in 1971, studied for an MBA at the Columbia and worked in a Wall Street prior to establishing himself one of the leading international business executives.
Montezemolo’s business achievements began after he returned to Italy from the United States as special assistant to Enzio Ferrari where he became the race team manager. He then joined Fiat in a variety of positions including being responsible for international public affairs, then moved to CEO of Cinzano (the aperitif make, and a Fiat company) and was chairman of the organization of the Italian World Cup Soccer of FIFA.
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In 1990 he returned to Ferrari as chairman and CEO charged with making the company financially successful and the F1 team a winner. In short order Montezemolo accomplished both and subsequently added CEO of Maserati to his resume.
During the recently concluded Frankfurt Motor Show, I had the rare opportunity of interviewing and chatting with the stylish executive in a small conference room at the Ferrari stand. Here are the highlights of our conversation.
MB: Given the state of the automobile business worldwide, how was
Ferrari’s business in the first six months of the year?
LdiM: We are slightly down – 8% -- from last year, but that was the best six months in the history of Ferrari and last year was a record year for Ferrari. In the first half of 2009 we sold 3,221 Ferrari’s around the world with a value of € 891 million and profits of €124 million. Our merchandising and licensing revenues were up 27% in the first half and our marketshare went from 22% to 53%.
MB: What are the key parts of Ferrari’s businesses?
LdiM: The business of the Ferrari brand around the world has three main activities, road cars, racing cars and Formula 1 cars for annual sales of $1.5 billon USD. Our licensing, merchandising and e-commerce businesses, facilitated by our Formula 1 team activities – the most winning -- amounts to millions of dollars.
MB: How has Ferrari been able to continue selling its expensive
LdiM: I always tell our people, “we do not sell a car, we sell a dream” and we sell 6,500 Ferraris a year. Buying a Ferrari is different than buying a normal car. And so we are lucky because – we are out from the crowd and even with this recent financial storm we are not in the middle of the storm.
MB: What are the essential elements of “selling a dream?”
LdiM: For me it is a crucial to maintain three elements in Ferrari: One is exclusivity. Ferrari has to be like a good looking woman, you have to desire her … so you have to wait for the dream. Exclusivity, it means you build far less cars than the demand.
MB: Secondly …
LdiM: Second, inside the dream you must build extreme technology because inside the dream you need exclusive technology. You know the world is big … so I think we have to be realistic technologically even as the world is changing.
MB: And the last is …
LdiM: And the third is to build cars with very, very strong emotional content. These three elements, exclusivity, extreme technology and emotional appeal give our clients something unique and they live the dream.
MB: Where are your strongest markets?
LdiM: The United States, which is our largest market, yet this is a country with very strong speed limits and in which Formula 1 is not as popular as it is elsewhere in the world. So it is the brand, the beauty of the car, the exclusivity, the technology and the fame of the Ferrari dream. We also sell well in Italy, the Middle East and have a growing market in China.
MB: Are there problems selling your cars there?
LdiM: In China this year we will sell 201 cars despite a very high tax. Today if you want to buy a Ferrari in China you will pay double! Exactly double. So despite high taxes there is still a strong demand for our cars.
MB: Why is Formula 1 so important to you and to Ferrari?
LdiM: Because Ferrari is extreme technology because with Formula 1 technology we can win and have the most winning teams. We use extreme technology as an advanced research center for added value.
MB: Formula 1 has lost a couple of manufacturers because of the high
costs associated with racing, what are your expectations?
LdiM: I want Formula 1 to pay or breakeven. The extreme technology of these cars which includes gear box, engine, aerodynamics and electronics has many applications to us and to Fiat.
MB: Aren’t there some F1 rule changes which have riled you?
LdiM: I deplore the same engine for everyone. I want to win with my gearbox, my engine – I want to win! So technological and sportive competition is secondary to winning but they want to equalize Formula 1, I don’t want to!
MB: What do you want from Formula 1?
LdiM: Last point, I want Formula 1 to have good drivers, big names, big speeds, I rather prefer to run three Ferrari’s instead of three unknowns with unknown drivers and no capability, it’s not competitive.
MB: What is your history with Ferrari?
LdiM: I am the oldest chairman in the car manufacturing in terms of presence in the job, because I’ve been chairman of Ferrari since 1991. Nobody else -- Ford, General Motors – I’m also chairman of Fiat, but we won’t talk about that.
MB: What does the future hold for Ferrari?
LdiM: We said many years ago we will come out with a new car every year. Last year the California was introduced -- I love it … for me it’s fantastic -- because you can drive if like a city car, but when you push it, it’s fantastic. And I love the possibility of having a double face – regular city car, but when you need or want it a Ferrari racecar.
MB: Given the recent Porsche/Volkswagen corporate merger, will Ferrari
develop smaller vehicles like Porsche?
LdiM: No, for two reasons. First of all the dream has to be in exclusivity which is exactly the opposite of your customers. I think we have an extreme sportive car, like the California. It is not our capability to go down. There is also another reason. Our group, in the Fiat Group is Ferrari, Maserati and Alfa Romeo. Even without Maserati and Alfa Romeo we have no intention of four door cars or lower level of cars. To do a small Ferrari is to do a Ferrari with less technology – is not following our demand for extreme technology in all our cars.
MB: Do you believe Fiat can bring its technology to Chrysler in the
LdiM: We have given Fiat some good technology such as the Formula 1 gearbox that was introduced for the road cars is now on Fiat’s. I think Fiat has got many tools and technology for Chrysler particularly small engines, small cars and lower emissions. So this is the reason why I think Fiat will be very successful in the United States and the rest of the world.
MB: Will Sergio Marchionne be able to manage both Fiat and Chrysler?
LdiM: I think he can play a very good role to maintain a strong presence in the United States at the beginning and a strong presence in Italy with a first class team. He can manage both as Carlos Ghosn does with Renault and Nissan. I think he can fun with both because we now have good people in charge – go around the show Maserati, Lancia, Fiat, Alfa Romeo – there are very good people and good stands.
MB: Last question, what is Ferrari’s position on hybrids?
LdiM: Hybrids – electric …we will never have a taxi driver car. We demand technology, performance, acceleration, braking and exclusivity.
The 62 year old CEO has rock star status among Ferrari fans who were lined up at least 4 deep whenever I passed the Ferrari stand, and it wasn’t just for the beautiful models the brand uses to add significant interest to its vehicles. His first car, he told me was a Fiat Cinquecento (500), the second a Lancia. His vehicles now include a Fiat Panda, Fiat 500 and not surprisingly a Ferrari California.
Click PLAY to watch highlights from the Ferrari Press Conference at the recent 2009 Frankfurt Motor Show
There’s another di Montezeomolo on the horizon. Matteo, di Montezeomolo, the 32 year old son of Luca is vice chairman of a furniture design company, partially owned by his father, was profiled by the New York Times design section Sunday, October 4, 2009. CLICK HERE to read story.