Ferrari powers to record profits

Jon Van Housen

Ferrari has shown that status, style and superlative design can power through even stiff economic headwinds. As it approaches its 70th anniversary, the iconic brand announced record profits just a year after it was spun off from Fiat Chrysler.

Ferrari posted net profit of 400 million euros in 2016, a 38 percent increase over 2015, on revenues of 3.1 billion euros. It delivered 8,014 cars last year, its most ever.

Record sales for Italy's Ferrari
Sergio Marchionne, CEO of Ferrari as well as Fiat Chrysler, said he has set a goal of producing and shipping 10,000 units while maintaining the brand’s luxury appeal.

By year’s end, stockholders were no doubt also thrilled with Ferrari’s acceleration. After a share price of €43 at its initial public offering to form the new Ferrari N.V., which is incorporated in the Netherlands, the stock fell 32 percent before rising back to hit €55 a share by year’s end, a 27 percent increase since its launch. Since its low point in late January 2016, the new stock almost doubled in a calendar year, according to the English-language website of Italy’s respected Il Sole 24 Ore newspaper.

Part of its performance has been a recovery in the massive, free-spending China market, where well-heeled executives and officials are awash in cash. Sales in China rose 26 percent in the first half of 2016 after falling nearly 25 percent in 2015.

For a time the supercar was the unwitting symbol of corruption and excess in China. After the son of a high central party official was killed in a fiery crash while driving a Ferrari with two women aboard, China’s active Internet was ablaze with questions on how the “princeling” son of a government official came to own a car that after duties and fees costs €500,000 in a country where the average yearly wage is about €8,000.

Sales were also hindered by Premier Xi Jinping’s widespread crackdown on corruption that netted some 300,000 officials in 2015. It was not the time to paint a target on yourself by buying your son a Ferrari.

But even as the China market rebounds for Ferrari, the US remains its largest with a 30 percent share of sales. Second is Europe, with the UK its largest export destination on the continent followed by Germany.

Sergio Marchionne, CEO of Ferrari as well as Fiat Chrysler, said he has set a goal of producing and shipping 10,000 units while maintaining the brand’s luxury appeal. The cars are still all made in Maranello in the Emilia-Romagna region of northern Italy.

Ferrari is the world's most powerful brand, according to the UK-based business analysis company Brand Finance. In 2012 a 1962 Ferrari 250 GTO became the most expensive car in history, selling in a private transaction for $38.1 million

The company was founded in 1939 by the legendary Enzo Ferrari who previously worked at Alfa Romeo. It made its first racing car in 1940, with first Ferrari-badged car produced in 1947.

Italian supercar competitor Lamborghini now makes about 3,500 cars a year. Sold to Chrysler in 1987, it was later bought by Volkswagen, but retains its production in Bologna, also in the Emilia-Romagna region.