Ferrari's New Wheels
A wood fire crackles in the living room of the majestic 19th century Bologna villa that is home to Ferrari Chief Executive Luca di Montezemolo. Leaning back on a plush sofa, the 54-year-old executive sips sparkling wine as he recounts the Italian auto maker's hard-earned victories. In September, Ferrari snapped up its second Formula One race championship in a row and its third consecutive win as best manufacturer of Formula One cars. Off the track as well, 2001 is shaping up to be a memorable year: Operating profits are on course to hit a record $55 million, on sales of around $950 million. "What means the most to me is winning the Formula One award for best carmaker," says di Montezemolo, who has trickled much of the advanced racing technology into new road models.
Not bad for a company that less than a decade ago seemed stuck on the sidelines of the sports-car world. Di Montezemolo, a marketing virtuoso and rally driver, took over Ferrari in 1991 at the personal request of Gianni Agnelli, patriarch of the Fiat clan and head of the Fiat group, which owns 87% of the Maranello-based company. Di Montezemolo overhauled Ferrari, luring top talent to the racing team, boosting the quality of its road cars, and jazzing up marketing. Then came the second act: In 1997, Ferrari acquired control of Maserati from Fiat. The Italian sports-car maker's fortunes had declined under foreign owners, and Fiat itself had struggled in vain for four years to turn it around. Now, with new models to launch, "the crucial year for Maserati will be 2002," says di Montezemolo.
The moment is nigh. On Jan. 7 in Detroit, di Montezemolo will host the U.S. debut of the Spyder, the first of three Ferrari-engineered Maseratis. The Spyder, a convertible that starts at $85,000, boasts a Ferrari-built lightweight V-8 engine, a curvaceous body, and a $4,000 option for a transmission derived from Ferrari's winning Formula One cars. The car was launched in Europe in September and will land in U.S. showrooms in March, marking Maserati's return to the American market after an 11-year hiatus. A remodeled coupe will be introduced this spring.
Maserati's revival is the centerpiece of di Montezemolo's strategy to rev up sales from a broader universe of sports-car customers while retaining the high-octane cachet of the Ferrari brand. Well-heeled customers on both sides of the Atlantic are buying up Ferraris quicker than the company builds them, even though prices start at an eye-popping $140,000. That's because di Montezemolo purposely limits annual sales of Ferraris to around 4,000 cars to preserve the marque's exclusive allure. "Just about every dealer in the country has a waiting list of about three years for a car," says Sean Harris, a Ferrari dealer in Salt Lake City.
No such limits will be imposed on Maserati, which now accounts for about one-third of Ferrari's annual unit sales. The company will offer Maserati sports cars for everyday driving that start at $80,000. That price bracket pits the Maserati Spyder and other Maserati models against the Porsche 911 and the Mercedes-Benz SL roadster-cum-coupe. Di Montezemolo is aiming to ratchet up Maserati's sales to 9,000 by 2006, up from just 2,000 last year. "Rebuilding Maserati is a way to expand Ferrari's sales without diluting the Ferrari brand," says Gregory Melich, an auto analyst at Morgan Stanley Dean Witter & Co. in London. "But they have to be successful in the U.S."--the world's biggest market for luxury sports cars.
Maserati does face an uphill drive stateside. The economy is in recession and still recovering from the events of September 11. Even di Montezemolo, who drives a snappy midnight blue Maserati 3200 GT coupe with vanilla leather interior, admits "it's not the best psychological moment" to introduce the Spyder. And car buffs may shy away from the brand, recalling the quality problems that once plagued it. That's all in the past, insists di Montezemolo, who as part of his overhaul of Maserati gutted its 63-year-old brick factory in Modena and refitted it with a cutting-edge mini-production line modeled on that of Ferrari. Still, the margin of error in this business is thin. "If your super-rich client's car breaks down once, that's O.K. If it happens twice, he'll get rid of it," says Peter Schmidt, head of consultancy Automotive Industry Data Ltd. in Warwick, Britain. Besides, plenty of young, affluent Americans don't recall Maserati's legendary exploits on the racetrack. "We have to convince a new generation to buy Italian sports cars that they can drive every day," says di Montezemolo.
He's off to a good start. Critics have lavished praise on the Spyder's styling, handling, and features including the six-speed Formula One-style transmission: It's operated by paddles mounted behind the steering wheel for shifting gears with greater ease. The Spyder can reach speeds of over 280 km per hour. Its V-8 engine gives off the same signature howl as Ferrari's roadsters.
In Europe, some 700 Spyders have been sold to date. U.S. orders numbered 500 at last count, including one from American fashion designer and sports-car enthusiast Ralph Lauren. "Maserati gives the market a purebred Italian race car at a price not available with other brands," says Lauren, who boasts a stable of Ferraris old and new. "You have to look at it seriously because it's coming out of the Ferrari world."
The Ferrari world was in disarray when di Montezemolo arrived in 1991, following a career that included stints at blue-chip Italian companies, such as Fiat and Cinzano. The company had lost its way following the death in 1988 of founder Enzo Ferrari, who in the early 1970s tapped di Montezemolo to lead its Formula One team. Three decades later, the race team had racked up a string of defeats, manufacturing quality was suffering badly, costs were out of control, and sales were plummeting. Working closely with head designer Sergio Pininfarina, di Montezemolo stripped away the fussy details of Ferrari's 1980s' dashboard and toned down its flashy exterior styling. He also installed a younger generation of managers and ramped up spending on research and development to as much as 19% of sales, tapping into space technology for advanced materials and aerodynamics.
The Spyder clearly benefits from all the gains Ferrari has made. The question is whether di Montezemolo can also produce a sedan that is a hit in a brutally competitive market segment dominated by BMW, Mercedes, and Audi. The Quattroporte, a four-door sedan, won't be out until 2003, and its features are still top secret. But selling a luxury sedan--which an affluent family may use every day--is a different task from selling a pure sports coupe. "With Ferrari, you have a real sports car. But with Maserati, you have something in-between," says a German auto executive. "They have to find a niche for Maserati."
Rebuilding Maserati is also turning out to be a costly venture. The line is not expected to turn a profit until 2004, and losses at the unit over the past four years tally up to $115 million. The cost of the relaunch weighed on Ferrari's earnings for 2001, though operating profits are still set to climb by 30%. Yet some industry experts believe Ferrari's investment in Maserati, expected to total $343 million through 2006, will yield handsome returns. "They've got an uncut diamond in terms of Maserati's image," says Automotive Industry Data's Schmidt. It's up to di Montezemolo to restore the sparkle.
By Gail Edmondson and Christine Tierney in Maranello, with David Welch in Detroit