The Man Who Saved Ferrari
Luca Cordero di Montezemolo wasn't pleased when a popular Italian women's magazine ranked him as one of its top 10 examples of "ideal masculine beauty." Trailing slightly behind Sean Connery and Harrison Ford in a poll of 1,000 Italian women, the 51-year-old chairman and CEO of auto maker Ferrari immediately complained to the magazine's editors. "I am a manager, not a movie star," he says.
Nevertheless, di Montezemolo knows that sex appeal is what Italy's luxury car industry is all about. Elegantly dressed, engaging, and always quick with a broad smile, di Montezemolo has plenty of what the Italians call bella figura, the ability to make a good impression. But beneath the polished image--including the bright red cellular phone with the Ferrari logo and the $5,000 Girard Perregaux wristwatch--is also a shrewd businessman. "Montezemolo is atypical in Italy because he follows through," says Francesco Casolari, director of the Industrial Association of Modena. "In Italy, a lot of people do a lot of talk, but little action. He is a man of action."
Since taking over Ferrari in 1992, di Montezemolo has thoroughly transformed the once deeply troubled auto maker. Back then, Ferrari, which is now 90% controlled by auto giant Fiat, was losing millions of dollars a year. At its low point in 1993, it sold only 2,289 of the ultra-pricey roadsters--just half of the cars it produced annually during the 1980s.
To fix the mess, di Montezemolo spent $80 million modernizing its factories. He brought in engineers and designers from Fiat to rethink every step of production and design. At the same time, he overhauled Ferrari's offerings by rushing out nine new models, up from just two, including the legendary Testarossa. The $160,000 Ferrari 355--yes, that's the low end--has sold particularly well since its 1994 launch. The moves trimmed costs and improved efficiencies while preserving Ferrari's elite image. The result: Ferrari, though still tiny in size, is back on solid financial footing. With sticker prices that range up to $280,000 for the top-of-the-line four-passenger 456M, Ferrari sold 3,637 cars in 1998. Last year, pretax profits rose to an estimated $24 million on sales of $623 million. That's a big leap from the puny $2 million it earned on $399 million in sales in 1995.
DOUBLE TROUBLE. As if that weren't enough, in 1998, di Montezemolo acquired Maserati, an even more troubled Italian auto company that had been losing money for 15 years. He spent $75 million to refurbish its plant and introduce the new 3200 GT coupe last November. And he established a new dealer network featuring both Ferraris and the far more affordable Maserati models. Maserati is on track to sell 2,000 of its 3200 GTs, which go for $88,000, in 1999. Di Montezemolo predicts that the unit will break even by the end of this year.
With both Ferrari and Maserati regaining their momentum, di Montezemolo is emerging as one of Italy's more accomplished marketing maestros. "He has kept alive Ferrari's image as the icon of a super luxury sports car," says Helmut Panke, a management board member at BMW. Di Montezemolo says his success stems from "creativity, teamwork, and enthusiasm." But it also hasn't hurt that Ferrari's largest market, the U.S., which accounts for 23% of sales, is in the midst of a roaring bull market that creates a new crop of millionaires with every Internet IPO.
Still, Ferrari couldn't have found a better cheerleader for its cars. Di Montezemolo's eyes gleam with delight when he talks about the 360 Modena, the latest Ferrari model, which will hit European showrooms in April and will go on sale in the U.S. for $170,000 later this year. A master at generating hype, di Montezemolo last year turned heads when he covered a prototype of the 360 Modena with cardboard and masking tape while driving back and forth between his country house near Bologna and his office, 22 miles away, in Maranello. Indeed, he misses no opportunity to play the promotional pitchman--though always with an Italian twist. "A Ferrari is like a beautiful girl that makes you fall in love at first sight," he says in slightly accented English.
The problem, of course, is that this beauty has always been more pleasing to look at than it was to possess. Ferrari's founder, racing pioneer Enzo Ferrari, engineered his sports cars with a single objective in mind: speed. His legacy became uncomfortable cars that appealed only to professional racers or well-heeled daredevils. When Ferrari died in 1988, the company was already teetering on the edge of bankruptcy.
After several more troubled years, Italian automobile titan Gianni Agnelli, then chairman of Fiat, handpicked di Montezemolo in 1992 to revive the luxury auto maker. Agnelli needed someone to restructure Ferrari, renew its car line, and refurbish its dated plants. So why di Montezemolo? In the world of Italian aristocrats, family connections go a long way. And Agnelli and di Montezemolo's father were old and close friends. Still, di Montezemolo had some selling points all his own. He had already worked for both Ferrari and Fiat earlier in his career, and he later made a name for himself as a marketing whiz at Cinzano, the liquor company.
But what really sold Agnelli on di Montezemolo was his record as a sports-event marketer. Prior to joining Ferrari, he had been in charge of organizing Italy's 1990 World Cup Soccer championships. His duties ranged from putting together fund-raising concerts featuring Luciano Pavarotti to getting corporate sponsorships for the event. The games, which turned di Montezemolo into a bit of a national celebrity, were a huge financial and public-relations success.
When he arrived at Ferrari, di Montezemolo found a company stuck in the 1980s. "The range of products, the mentality, the way work was organized all needed to be changed," he says. He quickly rolled out the lower-priced and popular 355. And he made that and other models far more comfortable to drive and even put a back seat in the 456M--unheard of in the older models. To make more room in another model, di Montezemolo bucked a longstanding Ferrari tradition and ordered the engine moved from the rear to the front. "My technicians said I was crazy," he recalls.
LESSONS INCLUDED. He also offered the cars in a range of 16 colors and gave each new owner racing lessons on the company's private track. And with the addition of the Maserati to Ferrari showrooms, consumers now stand a better chance of finding a car they might be able to afford when they come in to gawk at those Ferraris. Says Standard & Poor's dri auto analyst Pietro Frigerio: "Montezemolo has imported the idea of customer service from the U.S."
Di Montezemolo also has something for those who can only afford the price of a key chain. An extensive merchandising sideline he has developed now accounts for 10% of the company's profits. Stores in Rome, New York, and Los Angeles sell Ferrari T-shirts, watches, bathrobes, hats, and other gear. And last year, Mattel signed a deal to sell toy Ferraris.
How does di Montezemolo relax? A few years ago, he and a friend, shoemaker Diego Della Valle, bought the rights to a defunct perfume called Acqua di Parma, once made famous by Audrey Hepburn and Ava Gardner. They now sell the stuff at Bergdorf Goodman and, soon, at Saks Fifth Avenue stores across the U.S. And in 1995, di Montezemolo bought Web Line, a sunglasses company that had $13 million in sales last year. Its shades have already been spotted on the likes of Sharon Stone and Princess Caroline of Monaco, a fact di Montezemolo hasn't been shy about publicizing. That's di Montezemolo for you--a marketing maestro who never stops selling.