It’s official: the Ferrari SUV is happening
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It’s official: the Ferrari SUV is happening

This week, Sergio Marchionne has confirmed speculation that Ferrari will be making its first sports utility vehicle (just don’t call it an SUV!). Investors have been eager to see which way the company would turn ever since the possibility was floated earlier this year.

On the one hand, concerns about watered down exclusivity were raised – but on the other, Ferrari has that in spades. What it needs for growth is to trade as little of that exclusivity as possible for as much potential revenue. The SUV is a good idea: it will open the company up to new products and price points without diluting its iconic supercar business.

Ferrari’s share price has appreciated by 95% so far this year

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SOURCE: Yahoo Finance

Ferrari will now spend 30 months considering how many SUV’s to produce – even though it’s a new product category, Ferraris of any type are luxury products. Produce too many of them, and they lose a portion of that cachet.

The SUV has been a point of discussion ever since Marchionne declared what an awful idea it was. Then, in August, he conceded, saying it “probably would happen”. But deciding to do it is one thing; deciding how to do it is another thing entirely. While the company has not revealed any specifics, there’s a good chance we’ll get the low down in early 2018. In the first quarter, Ferrari plans to release a new five-year plan that runs through 2022. In August, people close to the matter claimed that the potential SUV was being floated as a part of that plan.

Disclosure

Dominion holds Ferrari in its Global Trends Luxury Fund.


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