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Ferrari's New Era: It's Marchionne's Turn Now, and He Wants Growth

Motor Trend logo Motor Trend 10/29/2014 Angus MacKenzie

Enzo Ferrari, who founded his eponymous company in 1947 as an extension of the race team he'd run since 1929, might have created the legend, but it's Luca Cordero di Montezemolo, born into an aristocratic family the year the company was founded, and appointed Ferrari chairman in 1991, who turned the legend into money, to the point where Ferrari has recently been ranked the world's most powerful brand, ahead of Apple, Coca-Cola, Rolex, and Google.

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Now Sergio Marchionne, the sweater-wearing workaholic who, through sheer force of will, merged together two of the most unlikely automotive partners to create Fiat Chrysler Automobiles (FCA), wants to cash in.

Marchionne's announcement that FCA will spin off Ferrari, distributing 80 percent of stock to current FCA shareholders and offering 10 percent to the public, probably via a listing on the New York Stock Exchange (Enzo's son, Piero Ferrari, will retain his current 10 percent stake in the company), explains why Montezemolo suddenly left Maranello in September. Luca wanted to maintain Ferrari's autonomy; Sergio wanted to leverage the power of the Ferrari brand to dazzle investors and help fund a $61 billion expansion plan that will see Jeep and Alfa Romeo become true global premium brands. Marchionne won that fight.

Analysts say the Ferrari business is worth somewhere between $6.3 billion and $7.3 billion, which gives Marchionne the opportunity to unlock a lot of capital to jumpstart his ambitious growth strategy for FCA. The markets like the idea – FCA stock, which had failed to excite investors when first listed on the New York Stock Exchange in October, jumped 11 to 13 percent in trading in Milan and New York on the news. But what does it mean for Ferrari?

First, Ferrari is not leaving the FCA orbit. Instead, Ferrari is going to grow.

In recent years Montezemolo repeatedly insisted Ferrari would never build more than 7000 cars a year to preserve its exclusivity. (In the 1990s he said Ferrari would limit production to 5000 cars; the higher total came as markets such as China and Russia exploded into life.) Montezemolo also insisted Ferrari would never build a four-door car. Sedans, he said, were for Maserati. Marchionne shares no such religion: He's already said Ferrari volumes could be increased gradually beyond 7000 units. That doesn't just mean more Ferraris. It means different Ferraris, too.

The poster child for Ferrari's future growth is, arguably, Bentley. When Montezemolo took the top job at Maranello in 1991, Bentley built just two models -- the Turbo R sedan and the Continental R coupe -- and sold a few hundred vehicles a year. Today, Bentley retails more than 10,000 cars a year, and is on track to sell 15,000 a year by 2018. Looking at Bentley, Marchionne might reasonably conclude it is possible to double Ferrari volume and still be regarded as exclusive. He might also reasonably conclude that to achieve Bentley-style growth, Ferrari, as Bentley has already done, will need to add new models to its lineup.

The Ferrari FF was Montezemolo's attempt to broaden the Ferrari offering away from pure two-seat sports cars and coupes without building a sedan or an SUV, but the oddly proportioned two-door wagon has not been a success. Maranello has reportedly even insisted some customers order an FF to get priority on the wait list for a more desirable model. With Montezemolo out of the way, Marchionne, who OK'd the development of the Maserati Levante SUV (based on modified Jeep Grand Cherokee hardware and due to go on sale in the U.S. late next year) is likely to press Ferrari product planners to look a four-door coupe, or even an SUV, as a means to grow volume, as both have proven hot-selling vehicle formats for other luxury brands.

2014 Ferrari F12 Berlinetta© Provided by MotorTrend 2014 Ferrari F12 Berlinetta

For 63 of the past 67 years Ferrari's fortunes have been shaped by just two men: Enzo Ferrari and Luca Cordero di Montezemolo. Now it's Sergio Marchionne's turn.

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