Why You ‘Can’t’ Buy a Ferrari! The Business of Exclusivity
Cambridge dictionary defines exclusive as limited to only one person or a group of people. This article is less about the car manufacturer, Ferrari, and more about exclusive brands. Swap the word Ferrari and their tactics for other exclusive luxury lifestyle brands and their tactics and this article will still make sense. It may seem like a new trend with the emergence of companies that create their entire business system around exclusivity but this style of business is as old as the concept of entrepreneurship itself.
The Car market goes far beyond the idea of point a to b transportation. Since the start of car manufacturing, a growing luxury customer base has always demanded something special bringing about the rise of Ferrari.
Fast, sleek, and eye-catching can be used to describe a Ferrari car, exclusive is what you use to describe the Ferrari company. The company literally has a car they call the super fast which shows their rich history of racing and victory on the tracks.
Attention to detail, bespoke luxury features, and incredible performance make the car manufacturer stand out even from rival brands like Lamborghini and Pagani. As a car, Ferrari shows off incredible high-performance engineering while as a brand it screams exclusive.
History of Ferrari
Very few brand names in the world come close to the recognition that Ferrari has. Ferrari started as a small manufacturer of highly specialized cars. The name comes from the founder of the brand, Enzo Ferrari who was a race car driver. Enzo founded Scuderra Ferrari as an Alpha Romeo racing team before setting up Auto Avio Costruzioni in Maranello, Italy. This later transitioned to what we know today as Ferrari. At first, Enzo saw selling cars as a way to raise funds for the racing team.
The brand is truly Italian and it stays true to Its founders’ racing roots. The Ferrari 125 S which had 12 cylinders, was the first racing car that Ferrari developed to completion in 1947. In 1948 their first street car the Ferrari 166 inter was developed.
A lot of innovation that the company does, is first showcased in the tracks before being available in their fleet of road/street cars.
On May 4th, 2020 Ferrari’s market value grew to $30 Billion. Ferrari has become one of the most respected car companies in the world and it has an incredibly huge brand value. In 2020, a Ferrari Enzo from 2003 sold for a record-breaking $2.6 Million at an auction which is a testament to the worth of rare Ferrari models.
In the future, the company plans to design and sell fully electric cars. Ferrari also has plans to manufacture an SUV called the Ferrari Purosangue. The name Purosangue means pure blood or thoroughbred. This will be a first of its kind for the company after much resistance to selling an SUV despite many other car manufacturers like Lamborghini and Bentley selling SUVs.
Innovation, performance, and engineering excellence are only some of what Ferrari does to maintain its’ status as one of the most exclusive brands in the world.
Exclusivity
The brand is built on exclusivity and limiting ownership of the cars to only certain people. Some people would criticize this strategy and label it as discriminatory. All the same, it creates a lot of demand for their cars. The company has a unique class of customers who buy multiple vehicles in their collection. Having such a unique customer base cushions them from economical lows and highs that would affect most customers’ behavior and buying trends.
Ferrari is known to limit production to around 10,000 cars per year after increasing the limit from 7,000 cars. Sergio Marchionne, the late C.E.O of FIAT Chrysler and Chairman and C.E.O of Ferrari said that “I actually think cars are incidental to Ferrari. It sounds sacrilegious, but it’s truly a luxury brand”.
The Business is built on the company’s strong brand recognition which some analysts feel is still underrated. Brand Finance considers Ferrari as the world’s most powerful brand exceeding giant companies like Disney and Google.
Ferrari cars are hand-built and customized to the owners’ specifications by their brand guidelines. This makes the cars have a slower build process and a higher price tag.
Ferrari cars are quite costly but their value holds over time in some instances the value increases. The price is the first barrier to exclusive ownership. The price is also inclusive of bragging rights that go hand in hand with owning a Ferrari.
Preferred list
Ferrari does not publicly acknowledge the existence of a preferred owners list but it’s often referenced when many people tell stories of rejection from the brand.
Buyers have been known to wait for years for the delivery of their cars, especially their limited-run models. Ferrari is rumored to have extensive lists of customers under scrutiny to select their ideal customers. There have been instances where the company was sued by people who accused them of not selling them cars.
Ferrari allegedly aggressively controls what its customers are associated with to be in good standing with the brand. The company has been accused of criticism towards its customers for behavior they don’t see fit for their kind of buyer. In 2019 a German fashion designer Philip Plein, was served a letter from Ferrari’s lawyers complaining about one of his Instagram pictures. Ferrari found it distasteful that he took a picture of his shoes on top of the car which Ferrari felt tarnished the brand’s image. In 2022 musician Justin Bieber was informed that Ferrari would not be selling him any of their cars for behavior they don’t see fit of a Ferrari owner.
Ferrari cars have been known to sell out at the point of announcement. This is mainly because dealerships are known to sell cars to preferred customers even before the official release of the cars.
Unlike Ferrari, companies like McLaren have a more relaxed policy when it comes to selling their cars. This works well for them as it allows them to sell a lot of cars and grow fast as a company. Porsche approaches the supercar market with a different strategy. They make a lot of their cars easily drivable for daily use as well as offering entry-level cars at low prices that can attract more budget supercar shoppers.
The only hope for Ferrari customers who have not been able to purchase the cars from the dealerships is to purchase cars in the second-hand market.
Brand Guidelines for Customers
Ferrari dealers have been known to refuse orders from new buyers trying to buy new cars instead offering them used alternatives. This is mostly done to get a feel of the customer and see if they fit into the Ferrari lifestyle.
Ferrari’s personnel set guidelines for every limited-run model with even more demands for their rare cars like the Ferrari La Ferrari. Some of the set guidelines include owning multiple Ferrari’s over a long period before purchasing a limited-run model, maintaining a good relationship by attending their events and races, and signing up for their racing school.
My Thoughts & the Future
The innovative brand keeps betting on itself as it prepares for the future of the automotive industry and beyond. The world has been moving into a more electrified future and every car manufacturer is releasing their interpretation of what an electric car looks like. Many people would be interested in what a fully electric release by Ferrari looks like.
The executives at Ferrari choose to not view the company as a car manufacturer but as a multi-industry titan and most importantly a lifestyle brand. The company has always had ventures outside the car Industry such as its Fashion line and theme parks. Ferrari wants its branded consumer products to contribute to 10% of earnings within the next decade. The company will continue innovating and coming up with unique ways of reaching its core target audience. One of the challenges that the company might face is stamping the Ferrari badge on a product that doesn’t represent the quality and innovation that the company is known for. This might happen because the team at Ferrari has for a long time worked with other companies to meet production and manufacturing deadlines of their other non-vehicular consumer products. In the last few years, Ferrari has been cutting back on its licensing partners as well as reducing the number of its licensed consumer products for improved quality control.
The brand has proved to have a solid business model and It keeps scaling despite limiting ownership of its cars. The future is still bright for the company and time will tell if Ferrari will keep dominating the luxury supercar market.
