Ferrari’s IPO may boost demand for supercar brand
Spinoff from Fiat Chrysler will also help reduce debt as FCA expands other lines
Ferrari’s filing for an initial public offering provides the supercar maker with a chance to burnish its brand and boost sales, analysts said.
The IPO, filed Thursday with regulators, is part of a plan by Sergio Marchionne, Fiat Chrysler Automobiles NV chief executive officer, to raise about $5 billion to reduce debt and help fund a $68-billion investment program that focuses on expanding Jeep, Alfa Romeo and Maserati brands globally. Ferrari, which would trade on the New York Stock Exchange, is to be spun off by early 2016.
“It really provides Ferrari with a chance to reinforce the brand and have people understand why the Ferrari is today the key symbol of prestige,” said Alexander Edwards, president of the San Diego-based consulting firm Strategic Vision. “I don’t think Ferrari is going to see a drop in sales.”
The Maranello, Italy-based unit’s first-quarter revenue rose 0.2 per cent to $890 million, while net income jumped 20 per cent to $93 million, according to the filing Thursday with the U.S. Securities and Exchange Commission.
“The spinoff from Fiat Chrysler should not deter demand for the brand or sales,” said Joe Phillippi, president of AutoTrends Inc., a consulting firm in Andover, N.J. “Ferrari will always be an exclusive brand for buyers.”
As a standalone automaker, Ferrari has the opportunity to branch out from sports cars as the market shifts to crossovers and other sport utility vehicles, said Jeff Schuster, senior vice-president of forecasting at LMC Automotive.
“Expect it to be an SUV that is more Ferrari than SUV,” Schuster said. “They won’t sacrifice the Ferrari brand to get into the SUV business, but having an SUV could be a smart move down the road.”
Edwards said the automaker might try to lure more women to a custom- er base that’s now largely men.
“The opportunities are strong enough and the risks are minor if they wanted to begin reaching out to other customers,” Edwards said.
“It would do a lot of good to improve the brand and increase sales.”
Erik Clover, sales manager of the Ferrari store in Austin, Texas, said the spinoff is “not really going to impact us that greatly at the dealership level.”
“I don’t see it being a bad thing for the brand and sales,” he said.
Fiat Chrysler announced plans last year to sell10 per cent of Ferrari in an IPO and distribute its remaining 80 per cent stake to its own investors. Piero Ferrari, the son of founder Enzo Ferrari, also owns 10 per cent and plans to keep his holding.
Fiat Chrysler said the number o shares to be offered or the potential price range had yet to be determined.
“It’s really a win-win for everyone,” Schuster said. “Marchionne gets the cash he desperately needs for his struggling brands and Ferrari gets its independence from the rest” of Fiat Chrysler.