Ferrari officials are capping production of the company's model at 7,000 units annually through at least through 2018.
Fiat Chrysler Automobiles plans to limit production of new Ferraris over the five years even as it brings on new models and despite growing demand in emerging markets.
FCA Chief Executive Officer Sergio Marchionne told investors and analysts during a meeting at Chrysler headquarters in suburban Detroit that Ferrari sold 7,000 cars in 2013 and expects to sell the exact number in 2018.
While the rising wealth in China and other emerging markets could sustain expanding Ferrari production to 10,000 units annually, Ferrari’s management have agreed not to expand production for now.
“We want to keep production capped to preserve the brands uniqueness, while continuing to search for opportunities in emerging markets but maintain exclusivity in mature ones,” said Marchonne, who also emphasized that “Ferrari is not for sale.”
Marchionne also said Ferrari will launch a new model every year with a four-year life cycle for each now model. It will launch selective special series that target high-end customers and broaden its “personalization” of key models to boost Ferrari’s profit margins.
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“That’s very good business for us,” said Marchionne, adding Ferrari is also working at improving the disappointing performance of its Formula One racing team
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Marchionne also said that analysts have undervalued Ferrari’s overall worth to the new company. Analysts have estimated Ferrari is worth between 3.38 billion euros and 5.46 billion euros. A more accurate valuation is twice that since Ferrari’s earnings before interest taxes depreciation and amortization or EBITDA could easily hit 1 billion euros if production reached 10,000 units.
Luxury goods companies usually sell for nine to 12 times EBITDA, he said. “All you have to do is do the math” to reach more accurate valuation of Ferrari. “Remember that the next time you look at our balance sheet,” he said when reviewing Ferrari’s overall value to FCA.
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In addition, Ferrari engineers are helping Alfa Romeo develop new powertrains. However, Ferrari engines will not be used by Alfa Romeo in its new models, FCA spokesman Gualberto Ranieri said.