Sometimes in business the decisions we make are in the interest of the brand not in the interest of volume. I for one feel that Luca was a man about the brand, focused on sustaining a venerable brand presence, a man determined to hold the brands prestigious value, a CEO who understood that creating a strong Teffosi perhaps added more value to the overall brand than selling one more car. This Wall Street Journal article takes a look at the history and the future of the Ferrari Brand with Luca leaving the helm after 23 years.
I WONDER HOW IT MUST LOOK from the outside: the 67-year-old chairman of the Italian sports car manufacturer Ferrari, forced to resign last week by the chief of parent company Fiat Chrysler SpA, reportedly in a dispute over production volumes. Who cares, right? Just another nattily dressed gentleman consumed in the fires of business history.
But this was the guy. When Luca Cordero di Montezemolo took the reins at Ferrari in Maranello, Italy, in 1991, the place was a venerated shambles. Enzo Ferrari had left the building long before his death, in 1988. The road cars were underachieving, the racing diffident and finances deeply troubled. In the U.S. in those days, Ferrari equaled “Magnum PI.”
Mr. Montezemolo, a Columbia-educated son of Italian nobility and keen student of sprezzatura, was already a national figure, having served as Enzo Ferrari’s assistant and as sporting director overseeing Formula One racing, in addition to managing the organizing of the 1990 FIFA World Cup in Italy and the Team Azzurra America’s Cup sailing squad. But Ferrari was taking on water fast.
Today, Ferrari is a global monster brand, a studied case in business management, a magical, red cash machine with record revenues and record earnings. The brick sheds and ’60s-era offices are now surrounded by sleek glass design studios and on-campus manufacturing. Ferrari has its own amusement park in Abu Dhabi and showrooms from St. Petersburg to Beijing. Under Mr. Montezemolo, Ferrari has won 14 World Drivers’ Championships and Constructors’ Championships—though, obviously, the team is rubbish this year. Ferrari is the most popular brand in Formula One racing by a flying kilometer, its annual merchandise sales beyond the dreams of avarice.
Ferrari California T
Price, as tested: $220,000 (est)
Powertrain: Front mid-mounted, turbocharged direct-injection 90-degree 3,855-cc V8;7-speed dual-clutch semi-automated gearbox/rear transaxle; rear-wheel drive.
Horsepower/torque: 553 at 7,500 rpm/557 pound-feet at 4,750 rpm
Length/weight: 179.9 inches/3,813 pounds (factory)
Wheelbase: 105.1 inches
0-60 mph: 3.6 seconds
EPA fuel economy: 20 mpg, combined (est)
Cargo capacity: 12 cubic feet
Of particular interest to me, Mr. M. ushered in two decades of increasingly shattering sports cars and GTs—Enzo, 599 GTB, 458 Speciale, and the defining LaFerrari hybrid hypercar that I drove in June. Fatefully, the last car of Mr. Montezemolo’s tenure is also our test car for the week, the redesigned California, now spelled with a “T” for “turbo.” Anon.
All of this has been the doing of one man, one managerial intellect, and he has been sent packing, effective Oct. 13. The tifosi are shaken.
See, this is where I part company with market forces’ presumed infallibility. The backdrop is Fiat Chrysler Automobiles planned IPO in October on the New York Stock Exchange. According to reports, FCA chairman Sergio Marchionne is in a drive for revenue and intends to increase Ferrari production numbers to perhaps 10,000 vehicles annually (currently around 7,000).
The trouble is, Mr. Montezemolo has spent his career at Ferrari—every time I have ever talked to the man, as far back as 1993—arguing the opposite course. Sell, sell, sell, but restrain production, increase rarity and exclusivity, raise residuals and, above all, protect the brand, even if that means leaving money on the table. His near-term plan actually called for lowering production numbers. I guess he finally lost that argument. Ruthless capitalists would see nothing amiss here. “It’s the same for him as it is for me,” Mr. Marchionne said last week. “We serve the company. When the company has a change of plans, or if there is no longer a convergence of ideas, things change.”
Except that executives aren’t always interchangeable. This is what market materialists never get. Setting aside his record, Mr. Montezemolo represents an unbroken chain of succession from Enzo, the living embodiment, the patrimony. European manufacturing concerns, particularly Italian companies, are often cults of male personality. Mr. Montezemolo—vulpine, mahogany-skinned, elegant—played the role perfectly.
And not all brands are fungible. Indeed, a key part of Ferrari’s mythology has been its independence, its gallant disregard of best business practices in the name of global sport. From the earliest days under Enzo, the company spent more money on racing than American accountants would probably think wise. Ferrari does most of its design and manufacturing in-house, in Maranello. The efficiency experts in Turin will likely want to change some of that, too.
Mr. Montezemolo has loudly and repeatedly refused to consider a Ferrari sport-ute/crossover vehicle. Enzo would turn over in his grave, and so on. But what will tomorrow bring now that Mr. Marchionne has direct control? Will the Formula One pit crews be issued red sweaters?
“Ruthless capitalists would see nothing amiss here.”
The irony is that purists once accused Mr. Montezemolo himself of selling out the brand. Take the California T, for example. When the first California made its debut six years ago, the notion of adding a front-engine, V8-powered convertible to Ferrari’s lineup—not an extreme sports coupe but a powerful, balanced grand touring car—struck many as a misstep, déclassé, an Italian Corvette.
But Mr. Montezemolo’s Midas touch didn’t abandon him. The California is now Ferrari’s volume product, with more than 10,000 sold from 2008 to 2014. A staggering 70% of California owners are new customers, and one in three is American.
The California needed more power and better efficiency, which obliged Ferrari to use a forced-induction engine in a road car for the first time since the F40 in 1987.
Turbocharging presents particular challenges to the Ferrari experience. Compared with the sound of a naturally aspirated flat-crank Ferrari V8—a beautiful metallic plashing with throbbing resonance at low rpm, an ice-hot bark and rattle at high revs—a turbocharged engine sounds muted and distant, whistling and thrumming, and unemotional. Also, compared with that hooked-marlin feel of Ferraris—the sharp, distinctive throttle response and linear acceleration, growing more emphatic with every gear—turbo’ed engines can behave badly, with lagging response and all the effective torque piled up top.
Ferrari’s technical team answered thusly: a 90-degree, flat-crank, dual-cam 3,855-cc V8 (.4 liter smaller than the previous free-breathing V8) with two twin-scroll turbochargers delivering a maximum boost of 19 psi. Low friction everywhere, with variable-volume oil pump, and light-weighted valve train, including roller-finger followers and cam chains driven off the flywheel. With peak torque of 557 pound-feet at 4,750 rpm, 50% more than in the previous car, the California T is a properly fast road beast. The revised styling is more aggressive and the California’s once distracting rear bustle—the previous car had kind of a fat fanny—has been liposuctioned.
And thanks to Mr. Montezemolo, it sounds like a Ferrari. The key piece of hardware in this tale is the engine’s wildly complicated, cast-and-welded equal-length exhaust runners, metallic knots of alloy tubes around each turbocharger. When I visited the factory in June, I asked the head of powertrain development, Vittorio Dini, about the unusual-looking headers.
“Oh, you ask my boss [Mr. Montezemolo],” he said with a laugh. “That is a crazy way to do it. I mean, technically, yes, but in business?” Mr. Dini went on to explain how the only way for his team to meet its aural targets—to give the turbocharged car a Ferrari’s characteristic brassy resonance, its heavenly shout—was to use this aerospace-complex and expensive part.
But the Big Guy said go for it, and so another Ferrari was born.
Who’s going to go for it now?