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If it`s not broke, don`t fix it
By:  Christopher Tersigni 7/21/2015
I’m convinced that the Fiat Chrysler CEO, one Sergio Marchionne, has a high-powered Hollywood agent handling his publicity. I would speculate that he is even distracted by the amount of press coverage that he receives these days. Maybe I’m jealous.

I’ve been following this FCA saga for some time, and other than the fact that it’s industry news, I have no real interest in it. I call it a saga because Marchionne stays in the news constantly -- trying to keep it fresh I suppose. Talking of mergers, complaining about the industry, shouting orders … all normal stuff. Now he’s bringing Ferrari into it and I’m paying attention.

The future of Ferrari…

Ferraris are simply art on wheels, with music. There’s something about a flat-plane V8 that can spin up to 8,000 rpm and stay together that is inspirational. Of course, times are changing, and so are engine configurations. But that’s another article.

The issue here is the future of Ferrari. Marchionne is planning on taking the Prancing Horse public in October (or any time he sees fit before then) of this year, and that has some folks a bit miffed. Well, I am, anyway.

FCA wants to raise cash; they always seem to want to raise cash --but who doesn’t. They own a 90% stake in Ferrari; the other 10% is owned by the son of Ferrari founder Enzo, Piero Ferrari. The Ferrari family will keep their stake, although I’m not clear as to how much force they exert on the company’s direction. That’s enough of the back story, now the brass tacks.

There are fewer and fewer remnants of business these days that parade the heritage of their history. Enzo Ferrari started the company in 1929, I think because he had the speed gene. Check. Ferraris have arguably been at the edge of beautiful design for decades; in fact I don’t think there has ever been an ugly one created. In recent years, they have become a little watered down and mainstream, but by no means have lost their appeal. That is set to change, because it always does when answering to shareholders.


Why screw it up?

The last thing a company like Ferrari needs is a taste of assembly line mentality, or sourcing parts from a manufacturer that changes dies from running ashtrays to axles. The beauty of Ferrari, and other manufacturers like Lamborghini, is the absence of complete automation. Sure, some components and processes are automated, but we’re not talking about a car for the masses (Ferrari moves about 7,000 cars a year). We’re talking about a statement built by hand, for those who can afford to say something.

My beef is that Marchionne will cater to shareholders by upping production numbers,which will in turn dilute the brand. Ferrari has stayed pretty true to the brand by building enough cars to pay for racing, and that’s always been a show of passion. Of course they make money; why else get out of bed? The thing is, it’s a Ferrari; a go-fast, red, Ferrari!Why screw it up? I’m already dreading the day when they announce plans to build an SUV (Lamborghini has already done so).

My last wary note here is at least analytical. FCA has a market cap of $18 billion, and they claim Ferrari’s market cap is about $11 billion. Now if FCA owns 90% of Ferrari, then what is FCA worth without them? My advice to Marchionne is keep those distracting cameras rolling so that no one can see through the fog.