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WINNING ON CAPITAL MARKETS WHILE LOSING IN F1. AT €30BN FERRARI IS VALUED HIGHER THAN FORD.
Munich, October 2020 | Topic: Capital Markets
WHY LOOK AT FERRARI?
Ferrari is not one of the uprising stars in CASE technologies, only sells around 10,000 cars per year and its recent F1 performance is far from where it once was. Nevertheless, Ferrari is valued at €30bn. Thus, this paper aims to delve into the drivers of Ferrari’s market cap.
WHY DOES FERRARI OUTPERFORM THE COMPETITION?
There are three major elements to Ferrari’s current standing.
Ferrari has a captivating heritage that sparks passion and emotion in people.
Ferrari has strong profitability that is achieved through superior lifecycle management and strong price realization. Ferrari’s price realization is a result of the brand’s desirability, which Ferrari maintains through scarce supply and limited access to its cars.
Ferrari has potential to grow further despite scarcity being a key lever of desirability. As long as supply remains below demand, the risk of infringing desirability is limited.
WHAT CAN OTHERS LEARN FROM FERRARI?
Luxury players should focus on maintaining the desirability of their brand, with scarcity and limited access being key levers.
Luxury players should carefully evaluate easy growth options against the risk to infringe desirability through oversupplying the market.
However, the emotions and passion for Ferrari and its remarkable heritage cannot be copied.