Fer­rari look­ing to put a carthorse in its sta­ble

The Star Early Edition - - NEWS - Bloomberg

FER­RARI is con­sid­er­ing adding a roomy four-seat “util­ity ve­hi­cle” as part of a ma­jor ex­pan­sion push be­yond its tra­di­tional su­per­car niche in a bid to dou­ble profit by 2022, peo­ple fa­mil­iar with the mat­ter said.

The fi­nal five-year plan un­der chief ex­ec­u­tive Ser­gio Mar­chionne, who’s set to re­tire in 2021, will tar­get boost­ing an­nual de­liv­er­ies be­yond a self-im­posed limit of 10 000 cars, which al­lows the com­pany to op­er­ate with less-strin­gent fuel-econ­omy rules, said the peo­ple, who asked not to be iden­ti­fied be­cause the mat­ter is pri­vate.

Un­der the plan, which is likely to be un­veiled in early 2018 and could ex­pose the car maker to stricter en­vi­ron­men­tal reg­u­la­tions, Fer­rari will also build more hy­brid mod­els to im­prove its ve­hi­cles’ ef­fi­ciency and woo new wealthy buy­ers, the peo­ple said. A Fer­rari spokesman de­clined to com­ment.

Since tak­ing charge of Fer­rari in 2014, Mar­chionne has been push­ing vol­ume, al­ready blow­ing past an ear­lier cap of 7 000 cars. While that ap­proach risks di­lut­ing the brand’s ex­clu­sive ca­chet, the 65-year-old flanked de­liv­ery growth with ex­clu­sive lim­ited-edi­tion mod­els, such as the $2.1 mil­lion (R27.52m) LaFer­rari Aperta con­vert­ible.

He’s now seek­ing to dial up that ef­fort to se­cure Fer­rari’s in­de­pen­dence as the car in­dus­try grap­ples with the strains of shift­ing to elec­tric-pow­ered cars.

Fer­rari, which re­ports sec­ond-quar­ter fig­ures to­day, is on pace to in­crease ad­justed earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­sa­tion more than 14 per­cent this year to at least €1 bil­lion (R15.42bn).

The new strat­egy is likely to in­clude dou­bling that fig­ure in five years, the peo­ple said.

Shares of Fer­rari traded in Italy rose 3.1 per­cent to €91.90 as of 3pm in Mi­lan, valu­ing the car maker at €16.8bn. The stock is on course to close at the high­est price since it started trad­ing on that mar­ket in early Jan­uary 2016.

Among pro­jects being eval­u­ated is a four-seat fam­ily car that of­fers more space

10 000 Fer­rari’s self im­posed an­nual car pro­duc­tion limit

than Fer­rari’s cur­rent twodoor GTC4 Lusso. The model is in­ter­nally dubbed the “Fer­rari util­ity ve­hi­cle,” fol­low­ing Mar­chionne’s pre­vi­ous ob­jec­tions to de­vel­op­ing an SUV. The big Fer­rari would be tar­geted at Asian cus­tomers, par­tic­u­larly in China, and may alone con­trib­ute 2 000 ve­hi­cles to an­nual de­liv­er­ies, the peo­ple said.

Fer­rari is study­ing ways to en­sure its sporty style with the new car, which the man­u­fac­turer will try to mar­ket as a new in­dus­try seg­ment rather than as an­other high-end sport util­ity ve­hi­cle, fol­low­ing the likes of Maserati, Bent­ley and Lam­borgh­ini, they said. The new car, which could have two or four doors, is ex­pected to be sold from 2021, the peo­ple said. No fi­nal de­ci­sion on the model has been made.

Fer­rari’s cur­rent tar­get is to boost ve­hi­cle sales to 9 000 cars in 2019 from 8 014 in 2016. An­a­lysts at at Me­diobanca, UBS Group and Bern­stein pre­dict de­liv­er­ies could jump to as high as 15 000 un­der a new strat­egy, which Mar­chionne hinted he was de­vel­op­ing dur­ing his first-quar­ter earn­ings pre­sen­ta­tion in May.

The busi­ness plan poses a risk, as rais­ing an­nual de­liv­er­ies to more than 10 000 cars a year would push Fer­rari be­yond its “small ve­hi­cle man­u­fac­turer” sta­tus, which pro­tects it from some US and Euro­pean fuel-use and emis­sions rules.

To ad­dress those is­sues, the Ital­ian car­maker, which was spun off from Fiat Chrysler Au­to­mo­biles in 2016, plans to in­tro­duce more hy­brid ve­hi­cles start­ing in 2019 to help com­ply with stricter en­vi­ron­men­tal reg­u­la­tions.

Those mod­els, like the cur­rent $1.5m LaFer­rari, will be equipped with an elec­tric mo­tor to im­prove per­for­mance and add horse­power.

Mean­while, boost­ing out­put could prompt Fer­rari to add a sec­ond shift to its factory in Maranello, Italy.

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