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Ferrari Could Be Forced to Revamp Strategy For Ailing Luxury Goods Line

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On: Fri, Apr 22, 2016 at 2:47PM | By: Carl Malek


Ferrari Could Be Forced to Revamp Strategy For Ailing Luxury Goods Line

When Ferrari was spun off by FCA several months ago, the Italian sports car company had goals of expanding its influence into other forms of luxury goods, but sluggish progress in this arena may force Ferrari to reset its long term goals, according to a report released by Automotive News.

While Ferrari's iconic reputation in the automotive industry has solid legs and an equally solid history, it hasn't translated well into luxury goods; the Italian firm has made little progress in its quest to compete with rivals such as Prada, Hermes, and Louis Vuitton. In fact, many of the initiatives that FCA CEO Sergio Marchionne initiated have so far fallen flat; Ferrari posted 21 million Euros in revenue ($23.7 million) in 2014 which is a mere 1 percent gain.

While the company stopped short of revealing its revenue total for 2015, commercial and brand activity were flat, which could mean that growth continued to be slow. Adam Wyden, founder of Washington D.C.-based ADW Capital Partners, bluntly summed up Ferrari's current predicament, stating, "Ferrari has an identity crisis. They told the world they are a luxury goods company so they should start behaving like Hermes or Loro Piana with their status symbol supercars. It is not about selling T-shirts or caps."

Ferrari's poor start in this market does reflect the tough outlook for luxury items as a whole: Terrorist attacks in Paris and Belgium have affected travel plans for wealthy Asian and Middle Eastern tourists and there is sliding demand in the Chinese market. Several former luxury goods executives have been appointed to put Ferrari's woes under the microscope to see what can be corrected.

While its ambitions as a luxury goods company may have taken a few hits, it is all not bad news for Ferrari, especially in regards to its vehicle business: The company posted record sales and a 9.4 percent increase in profit, mainly due to the new 488 GTB as well as the revamped FF.




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GdMaitre | 12:05PM (Wed, Apr 27, 2016)

Hello!

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