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Fri 17 Jun 2016 09:18 AM

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Why Ferrari is still the world's most wanted sports car

Italian sports car maker Ferrari reveals why the Middle East is such an important market and how it remains more exclusive than its competitors.

Why Ferrari is still the world's most wanted sports car

Few can argue that Enzo Ferrari’s beloved prancing horse has not retained its seat at the helm of the world’s most desirable sports cars, becoming virtually synonymous with the definition of speed.

But Enrico Galliera is not entirely happy with that statement.

Taking up a leather armchair in Ferrari’s Sheikh Zayed Road showroom in Dubai, the brand’s commercial and marketing director knits his fingers together and speaks in a heavy Italian accent.

“If you look in the market and you ask, is Ferrari the fastest car? The answer is no. If you ask me if Ferrari is the car with the highest horsepower, the answer is no. Is it relevant? We don’t believe so,” he says.

So what makes Ferrari almost every man’s dream car?

“It’s easy,” the Italian says. “If you want to be fast, you can drive a dragster. If you want to have a lot of horsepower, you just have to put some additional elements in the turbo engine. What is difficult is to combine the power with the drivability. If you drive a dragster on the track, you’ll be out on the first corner. It’s very good at going straight, but it’s not good on the corners. The specificity of Ferrari is not just about speed, it is to give the driver the pleasure to drive the car that he can bring to the limit. Whoever drives a Ferrari, even if he is not an expert driver, can bring the car close to the limit. Then if you want to go to the limit, you have to be a very good driver.”

“But the system that we developed in terms of combination of power and drivability is designed to deliver the best driving experience. That’s what makes Ferrari different. We call it ‘emotion to drive’. If you’re just on a Ferrari and you drive it, you come out of the car and you smile - emotion to drive. If you go on a dragster, maybe you come down scared, but only scared because it’s fast,” he says.

You do not have to worry about being scared in Ferrari’s latest invention, and the reason behind Galliera’s Dubai visit. The GTC4Lusso, Ferrari’s first ever rear-wheel steering, four-wheel drive vehicle made its Middle Eastern debut at regional retailer Al Tayer Motors last month, where Galliera was its presenter.

Boasting a V12 engine with a top speed of 335km/h, the Lusso can go from 0 to 100km/h in 3.4 seconds and is lighter than a thoroughbred Ferrari.

Yet a new car launch is the least outstanding of Ferrari’s recent endeavours. A more striking venture took place on October 29, 2014, when Italy’s pride and joy shocked the world with its decision to launch an initial public offering (IPO).

Ferrari's GTC4Lusso was unveiled in Dubai in February, ahead of its world premiere at the Geneva Motor Show.

Ferrari’s split from parent company Fiat Chrysler Automobiles Group (FCA Group) was finalised at the beginning of January, two-and-a-half months after it listed 10 percent of its business on the New York Stock Ex-change. Galliera says the part-sale raised fresh cash.

But despite an initial upsurge, Ferrari’s share price then plummeted and remains 20 percent lower than its opening $52.

The reason?

“I should have a crystal ball to answer this question. Frankly speaking, it’s difficult to understand," Galliera says. "The company is overcoming the results of the IPO; even the Q1 figures released recently have been very strong, above expectation."

The numbers prove he has a point.

In the first quarter of 2016, Ferrari revealed an $88m profit, a 19 percent rise since the same time last year. It sold 1,882 cars in the first quarter, marking a 15 percent rise from the same period in 2015. The high numbers are largely due to sales rising by double-digits in Europe, China and the Middle East. The latter, Galliera says, is especially important to the brand – but not solely due to sales.

“The Middle Eastern market is extremely important for us not only because we are selling an interesting portion of cars in all the Gulf countries, but because here in this region there is an important number of big collectors that know what Ferrari is about,” Galliera says.

“So sometimes we have a question on what is the difference of Ferrari versus other sports car manufacturers. You should ask these collectors. They can answer much better than I can, because they have the passion, the feeling. They can feel the difference of driving a car that is not only delivering performance, but also emotion that some other cars are not able to deliver.

“This market is very important because of this reason. There is an important number of clients that are very connected to our brand that deserve to be treated in a fair way. So we need to have a proper presentation, we need to have a proper place where to meet them. We need to have a proper service, it’s very important.”

Ferrari’s representation in the region is about to get a whole lot more significant, as the firm revealed it will increase its car production to 7,900 this year, up from 7,664 last year.

Ferrari has remained exclusive.

“We have to deliver one less car than the demand, to keep the exclusivity,” Galliera says, the corners of his mouth forming a smile. He is now more relaxed; his hands have fallen open on either side of the leather chair.

But one unusual problem remains: Ferrari’s competitors are selling less than half of the number of cars it has on the roads. The brand’s long-time rival and fellow Italian sports car maker Lamborghini, for example, sold about 3,245 cars in the GCC last year.

Does that - dare we ask - make Lamborghini more exclusive than Ferrari?

Just the mention of Lamborghini causes Galliera’s smile to fade into a serious scowl. He crosses his arms sternly over his chest and responds: “I have great respect for every other car manufacturer; we believe that the competition is helping to do better. But it is not a matter of numbers. The numbers are related to the level of demand.

“Without talking about brands, I think the key question is, if you visit a store of one of our competitors, can you buy stock? If the answer is yes, it’s not exclusive. If the answer is no, it means they are facing exclusivity. Three thousand, four thousand, five thousand cars [sold] – this means nothing. The ratio between demand and delivery, this is the key.

“Is it more exclusive to sell 5,000 than 10,000 cars?” Galleria continues. “I don’t think there is a clear answer. If you have the demand for 12,000 cars, 10,000 is very exclusive. If you have the demand for 9,000 cars and you sell 10,000, it’s not exclusive. That is the measuring ratio, the number of cars versus the level of demand is what we look very carefully at. That’s the reason why even in our current product range, most of our cars are already pre-sold for the whole of 2016 and some of our cars are already pre-sold for 2017. This is what we mean by exclusivity.”

Exclusivity aside, Ferrari is up against tough competition. In 2016, sports cars are a dime a dozen. And Ferrari is competing against not only specialist car brands, such as Lamborghini or Porsche, but generalist car makers including Mercedes and Audi who are also actively seeking to capture their share of the specialist market.

Yet Galliera is unfazed by the competition. “We have an advantage versus our competitor,” says the Italian.

“It is that the level of performance we have achieved in our cars is really amazing. For us, a new model is not just a small redesign with some additional horsepower. That’s easy. For us, a new model is a new concept, new positioning, and a completely new technological feature. There has to be something innovative in the car.”

And the innovation does not stop there. Already, the brand is working on its five-year plan and new models. One such introduction is a new limited series concept celebrating the brand’s 70th anniversary next year. The ‘very limited, collectors-only’ car is based on the brand’s pinnacle model, the $1m LaFerrari.

Galliera says exclusivity will remain a tagline of Ferrari despite plans to significantly increase car sales.

“It’s going to be a roadster, so it’s an open version of LaFerrari in very limited number. It will have specificities designed to celebrate the 70th anniversary. We are already [lining up] clients,” Galliera says, without revealing the price tag.

You will not, however, see Ferrari create an SUV (sports utility vehicle). Ferrari’s contender Porsche has long provided a line of rather successful SUVs, while rival Lamborghini has revealed it will launch its concept SUV sometime next year.

Ferrari, though, remains unmoved on the idea.

“This is one of the most common questions and, as always, we like to answer in the same way, which is ‘no’. We don’t have any plans to develop an SUV simply because we believe that it is not consistent with our company strategy. We are a sports car manufacturer. Try to drive a sports car, whether it is a Ferrari or another brand - a true sports car - and then try to jump in an SUV. It is not a sports car. It can be a fast car, but the weight of the car, the position of driving, it’s a different concept,” Galliera says.

“We prefer to remain consistent in our positioning. We want to have our customer, while driving a Ferrari, to have the emotion. You should feel the thrill of driving a Ferrari, and the SUV cannot deliver this perception. What we do is cars that deliver some of the benefits of the sports utility, [such as] the space on board, the four-seater - so the GTC4Lusso is the sports execution of Ferrari, a versatile car. It keeps the sport-side, [but] the position, the weight, the performance is a true Ferrari. But it gives you something an extreme sports car cannot give you: the four seats, the comfort, the video screen, these kind of things. So no we will never do an SUV. Yes, we will have a car that is designed for different uses, while remaining a 100 percent sports car.”

With its profits and sales in line and plans for new models on the way, it seems Ferrari is not affected by the low oil prices and global market slowdown.

“We have seen what you read in the newspaper that in some economies there has been a dramatic change, for different reasons - for economic reasons, for regulatory reasons, for political reasons. There are many countries where we are seeing a complete or radical change in the purchasing habits; Russia, China and in Europe, there’s some difficulties. But to be honest, as far as our performance in the market, we haven’t had any impact. So in most of the countries, even if you look at our quarterly results, they are growing; some of the them are even growing very fast, even in Europe it’s growing very fast,” Galliera says, adding that the brand’s somewhat immunity from the economic downturn is the result of its consistent policy.

“Number one: do a very attractive model. We have a very strong product line, and keep a certain waiting list on the car. So we’re not throwing numbers and as soon as there is a problem we start having problems. We try to keep our deliveries consistent and the demand remains strong. Cross your fingers, for the time being, numbers are very good.”

Even the car maker’s Ferrari World theme park in Abu Dhabi is doing well. A second is being built in Spain and Ferrari has recently signed an agreement to develop a third park in China.

Ferrari has also launched a product range stretching from colognes to clothing to watches, and has even established a Ferrari Museum in Italy, which displays vintage, and new road and race models.

The GCC and Lebanon combined accounted for nearly 7 percent of Ferrari sales in the first quarter 2016.

And rightfully so, as Ferrari’s history with Formula One racing makes it an ever-central player in auto sport. Despite not having won a championship for several years, Ferrari still holds the record for the most Grand Prix victories, having won 224 times. And it is adamant it will revive its winning streak.

“We always compete to win,” Galliera says. “There is something that is clearly stated in our offices, which is one of the most famous statements of our founder Enzo Ferrari, who used to say that ‘the second in a race is the first loser’. We are designed to win and we are committed to win. Then we have competitors so we are not alone. Sometimes you win, sometimes you don’t. But all the team is heavily working to make it and hopefully we will win this year,” he says.

To many, Formula One has become less about winning or losing and more about advertisers and engineers. Ex-Formula One boss Flavio Briatore famously called the championships a ‘PlayStation for engineers’, and accused it of forgetting the fans and ‘forgetting the show’. To Briatore, and many others, the races have lost their driver-centric charm.

Galliera says this is not entirely the case.

“I grew up with the passion of Formula One, with the dream to become a driver. I cannot become bored with Formula One. So I’m not the right person to ask the question, but of course, there has been a lot of discussion around this subject. A lot of work has been done with the Formula One organisation to make it more interesting for the public. There have been several decisions that will be affective. There are others that will not be affective. I think that every business has a task, which is to remain appealing. It is something that has to be done,” he says.

Given his allegiance to racing and his loyalty to Enzo Ferrari’s sports car empire, it is little wonder Galliera once dreamed of becoming a Formula One driver.

But it is surprising that he himself does not own a Ferrari.

“No one in Ferrari, even top managers, except our chairman, is allowed to buy and own a Ferrari. But there is a simple answer to that: we have limited production. It is not nice to have a client who is waiting for his car for 12 or 18 months and comes to see the manager driving his car. All the cars, we are giving to the client,” he says.

Enrico Galliera might have given up on his dream of racing and owning a Ferrari might be out of his hands, but he seems very well content with his starring role in the goal to ensure the world continues to keep riding the prancing horse.

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Angelika Lancsak 3 years ago

The brand is a legend. Nothing more to say.