22 days ago • 2 mins
What’s going on here?
Ferrari’s financial results and stock both broke records, as the luxury carmaker’s – ahem – formula won again.
What does this mean?
Ferrari’s business model should be on the classroom blackboard every time an economics professor mentions supply and demand. While most carmakers jostle for peak sales by making their prices as competitive as possible, Ferrari churns out a handful of finely crafted four-wheelers and charges a ton for them. Case in point: just over 13,000 status-symbol-granters rolled out of the luxury carmaker’s factories last year. And with the limited run of 599 new Daytona SP3 models hitting showrooms at over $2 million each, the average Ferrari – if there is such a thing – cost more than the year before. Those ever-increasing price tags meant the carmaker made 17% more in sales and 34% more profit. Vroom vroom, indeed.
Why should I care?
For markets: The sound of the future.
Petrolheads can recognize a Ferrari with their eyes shut: the signature sound of het-up horsepower is a siren call for billionaires with a penchant for country drives. Now, the uber-wealthy are infamous for casting Mother Nature aside for private jets and engine revs loud enough to scare small children. And that could threaten Ferrari’s position in the transition toward electric vehicles – or it would’ve, if the carmaker hadn't added artificial engine sounds to hybrid cars. They’re easily pleased, the rich and famous: those noisy hybrids made up 44% of Ferrari’s deliveries last year.
The bigger picture: The business of brand.
Ferrari’s found a place to build its brand awareness that’s as lucrative as it is fast: the racetrack. The company’s Formula One team – which will soon be home to racing icon Lewis Hamilton – is said to be the most valuable squad of all, bringing in a stream of sponsorship and prize money that makes Ferrari’s balance sheets blend in better with those of designer fashion houses than the likes of Ford and General Motors.
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