For Ferrari, size might matter
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For Ferrari, size might matter

Ferrari is allegedly considering adding a four seat “utility vehicle” to its line of vehicles. The Italian luxury supercar maker is working on a five-year plan to double profit by 2022, according to people familiar with the matter, who asked not to be named. Other moves that the company is working towards within this plan include upping the number of vehicles it produces per year (Ferrari currently caps their deliveries at 10,000 to maintain exclusivity) and increase the number of hybrid cars it makes to entice new buyers looking for more efficient models.

Ferrari is pulling ahead of the competition: share price +131% in a year

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SOURCE: Yahoo Finance

The people said that Ferrari may unveil its five-year plan early next year. It will be CEO Sergio Marchionne’s last big strategic push, as he plans to retire in 2021. Marchionne has already set the stage for some of what is being discussed: he has increased the number of cars the company sells beyond its annual 7,000, which the company was delivering when he took the reigns in 2014. He also oversaw a 24% rise in profit, year over year, during the company’s last quarter (for more on that, see here). 

There are risks associated with a larger vehicle, though. Marchionne himself has objected to an SUV, hence the potential vehicle being dubbed the “Ferrari utility vehicle” behind closed doors. According to Morningstar analyst Richard Hilgert: “There is a risk that an SUV could dilute the Ferrari brand. If Ferrari made a vehicle that has more space for occupants, looks like a Ferrari, sounds like a Ferrari, and drives like Ferrari, well -- it’d be a Ferrari.” But, he says, they’ll have to get it right.

Disclosure

Dominion holds Ferrari in its Global Trends Luxury Fund.


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