Ferrari Enters the Marchionne-Era

We begin with a history lesson:
Over the last seventy years Ferraris have evolved through four distinctive eras, the rapid evolution of the Enzo Ferrari era, the mass-market production increases of the FIAT years, the user-friendly, high-volume, option-heavy exotics of the Luca di Montezemolo era and now the Corporate big-picture-driven Sergio Marchionne era.

Two decades of rapid evolution:
Enzo was firstly a racer, only building street cars to help subsidize his increasingly expensive racing habits, offering his sporting clients mildly de-tuned race cars for road use. The Enzo era began modestly enough in 1947 with a pair of 125 Barchettas, s/n 01C and 02C. Powered by a diminutive 1497cc V-12, putting out a very modest 72hp, the 125 was a success from its second race, winning at Rome’s Caracalla Circuit on May 25th, 1947. At the first rebuild the 125’s engine went to 159 spec., with 1903cc and 125hp, and the evolutionary race was on. Within five years Ferrari racers leapt from the diminutive 125 Spyder to the 4522cc tire-shredding 340hp 375 MM sports-racer of 1953-54.

The Europa GT was introduced in 1954 and within two years evolved into the dual-purpose 250 TDF, as the differentiation between full-racer and milder street car started to widen. In yet another five years the TDF evolved and separated into the full-race 250 GTO for the hard-core racers and the much higher-volume 250 Lusso street cars to help pay the bills. Only two years hence the 275 GTB and GTS followed and within another half a decade morphed into the 365 GTB/4 Daytona. The racing department was further subsidized by the building of a series of ultra-exclusive limited production and one-off coach built cars for the mega-rich. Starting as a race and machine shop, Ferrari rapidly grew from only 2 cars built in 1947 to 619 cars built in 1969, making the transition to small manufacturer.

The cars of Enzo Ferrari dominated the racing world on every level, from F1 to Sportscar GT racing and a multi-year domination at Le Mans. The Enzo era was one of rapid, cutting-edge stylistic innovation and mechanical evolution, defining Ferrari as the world’s standard for ultra-exclusive ultra-rapid autos.

All good things come to an end:
By the mid-1960s, Ferrari, and indeed all of Italy, was crippled by labor unrest and frequent strikes. Ferrari was also hammered by Ford as the costs of sports-prototype endurance racing spiraled. All good things come to an end, and by 1969 Ferrari teetered on bankruptcy. Enzo’s multi-faceted racing habits, low production-car numbers and looming EPA and DOT regulation in the US market required a bail-out from FIAT, with FIAT taking a 50% stake on June 21st, 1969 and control of the production cars while Enzo kept control of the racing department. Ferrari soon had to concede all sports-racing programs to privateers which allowed Enzo to focus on Formula One. FIAT’s stake would ultimately increase to 90% with the last 10% owned by Piero Ferrari.

FIAT doubles production:
FIAT production-engineers shifted the emphasis from racing to street cars and in two years road car production jumped from the 619 built in 1969 to 1,246 in 1971. New EPA emission standards and DOT bumper and headlight regulations, combined with pressure from upstart Lamborghini, forced FIAT to develop the all new mid-engine 365 BB as the flagship 12 cylinder. FIAT also accepted that the looming regulations would kill off the popular 246 Dinos, and so introduced both the first of the all-new V-8s, the Bertone-styled 308 GT/4 alongside the 365 BB at the Paris Auto show in 1973. Almost simultaneous with FIAT’s production-car takeover, the glamorous era of the one-off coach built cars for the super-wealthy ended because of labor problems, the demise of the design studios and the looming bumper, headlight and emission laws. Further complicating Ferrari sales, the 1973 Paris Auto show was in October, the same month the first Arab oil crisis drove gas prices from 33 cents to $1 a gallon, (and much more in Europe) throwing the global economy into recession.

Styling by committee:
Today the faceless FIAT era is often remembered for the bland styling-by-committee of the 308 GT/4 and the 400/412 GT series. While Ferrari’s CEOs and CFOs of the 1970s and 1980s, such as Nicola Tufarelli, Giovanni Squazzini, Vittorio Ghidella or Piero Fusaro are largely unknown today, it must be remembered that all auto manufacturers suffered through the ignobility of the new bumper and headlight demands, new power robbing emission requirements, the volatile gas prices and a series of repeated world-wide economic crises. Additionally, in the 1970s Italy suffered through the era of the Marxist-Terrorist Red Brigade, at a time when driving a Ferrari was asking to be kidnapped, encouraging bland styling. Supercars and wretched excess simply went out of fashion through the early-mid 1970s. Mere survival was success.

FIAT responds to the new order:
FIAT’s mandate was to increase street car production. In 1976 the company responded to the new socio-economic order of the 1970s with the introduction of the highly successful Pininfarina designed 308 GTB, masterfully integrating bumpers and headlights while overcoming the power loss of emissions equipment with the torque of a 4-cam 3-litre V-8. Indeed the V-8s soon became the Ferrari standard-bearers, with V-8 production doubling and eventually tripling the V-12 production. The timing of the 308 GTB was fortuitous as the global economy and American economy were again booming.

FIAT also expanded the number of Ferrari dealerships and with the 308 GTB gave their dealers a high volume, affordable (a strange word to use in context with Ferrari) model to sell. Ferraris were no longer toys of the ultra-rich, but were now accessible to the merely wealthy. Through the 1970s and 1980s FIAT expanded the Ferrari brand with the 308-328 as the junior supercar, the 400/412 as a businessman’s express and the 512 BB and Testarossa as the Flagship 12s. The Testarossa, introduced in 1984, was the first 12-cylinder Ferrari specifically designed for the U.S. market, featuring integrated bumpers, U.S.-friendly headlights, a then state-of-the-art engine-management system and emissions system, making it a production supercar by the performance standards of the day.

FIAT also understood there was a market for a high-end exclusive supercar, building the limited-production 288 GTO, a 308 on serious steroids, followed by the F40. Each of these models set new benchmarks as the world’s most-exotic and then-fastest production car. Although racing successes were few and far between, in just over twenty years FIAT increased Ferrari production (and profitability) from only 619 cars a year in 1969 to well over 4,487 cars built in 1991.

Enter Luca Cordero di Montezemolo:
The Enzo era was unquestionably ruled by a strong-willed and driven individual while the FIAT era was run by forgotten CEOs and CFOs. The next era was again led by a strong-willed individual: Luca Cordero di Montezemolo. He joined FIAT in 1971 and in 1973, at the age of 26, became Enzo Ferrari’s personal assistant. In the early 1980s Montezemolo left Ferrari to manage other arms of the FIAT empire, returning to run Ferrari in 1991. Montezemolo made it his personal goal to regain the Formula One Championship while introducing all-new, state-of-the-art Ferrari road cars.

Coincidentally, the introduction of the Acura NSX in 1990 redefined the playground for all supercars. Cramped cockpits, inadequate A/C, overheating engines, recalcitrant windows, heavy steering, ad nauseum, were simply no longer acceptable. The 355 was a quantum leap over the 348, while the introduction of the 456 GT in 1994 and the 550 in 1996, marked a full-circle return to the front engine V-12 Ferrari flagships, offering all the amenities that are now de-rigueur, combined with the svelte long-nose, short-tail look that harkened back to the 1960s and early 1970s.

Re-defining leading edge:
Introduced in 1999, the all-new aluminum space-framed 360 re-defined Ferrari as a leading-edge manufacturer while the smooth, flowing and curvaceous lines matched those of the V-12 flagship 550. Under the tutelage of Luca Cordero di Montezemolo the V-8 and V-12 Ferraris defined the gold standards for exotic ultra-high performance, cutting-edge styling and real-world usability. Additionally, under di Montezemolo, one M. Schumacher won five consecutive drivers’ titles from 2000–2004, all while Ferrari moved beyond being a car manufacturer. Ferrari has become a brand name on everything from laptops to Teddy bears in Ferrari boutique shops from Beverly Hills to Bahrain. Today Ferrari has 68 licenses for goods ranging from Lego toys to Puma sneakers and 30 stores in 14 countries. In licensed merchandise Ferrari ranks 23rd among top global licensers and is very profitable, although accounting for only a tiny fraction of Ferrari’s total revenues!

Under di Montezemolo, Ferrari had become a multi-faceted corporate money-machine with production ramping up from 4,487 cars in 1991, to 7,255 cars in 2014. The company also came full circle in that corporate cash flow now helped pay the staggering costs of running an F1 team. Ferrari also encouraged their wealthiest clients to work with coachbuilders such as Pininfarina to build the one-off P4/5 and Zagato to build an exclusive series of very elegant and factory sanctioned Zagato-bodied 612s, 550s and 575s, none of which are for the slight-of-wallet.

Meanwhile back at headquarters:
By the late 1990s Ferrari’s parent company, FIAT, was a sinking ship surviving only with a €3b bailout from a consortium of Italian banks. In 1999 FIAT approached GM for a merge but was turned down. Mercedes (who had recently bought Chrysler) then offered to buy FIAT but GM re-entered negotiations. In 2000 FIAT and GM entered into a ‘strategic industrial alliance’, with FIAT acquiring a 5.1% stake in GM and GM acquires a 20% stake in FIAT. Additionally GM agreed to a ‘put option’, (essentially a bet by FIAT against a fall in FIAT’s market value) which stipulated that FIAT would have the right to sell the remaining 80% to GM after four years at a fair market value. Losses continued at FIAT with €400m in 2001, €3.9b in 2002 and €1.9b in 2003 bringing net debt to over €5billion. By late 2002 GM wrote down its investment in FIAT from $2.4 billion to $220 million. In a bid to survive, FIAT cashed out its best assets, selling its GM shares to Merrill Lynch and its financing arm, Fidid, back to the banks for €6b.

Enter the man in black:
Sergio Marchionne was born in Italy, but emigrated with his family to Canada at age 14, and became a dual Canadian-Italian citizen fluent in English and Italian. He earned the Canadian equivalent of a CPA, then an MBA and then became a Barrister (a lawyer specializing in advocacy and litigation), making for a formidable negotiator. Moving rapidly up the corporate ladder, in 2002 Marchionne staged a turn-around at SGS, a Swiss quality-assurance service company with 80,000 employees in 1,650 labs and offices world-wide. He tripled its value, coming to the attention of the Agnelli family, SGS’s part-owner. In May, 2003 Marchionne became a member of the Board of Directors of FIAT S.p.A. After the death of FIAT’s chairman, Umberto Agnelli, in 2004 he became CEO (at the same time di Montezemolo became Chairman). According to legend, when he first arrived at FIAT the top executives communicated via their secretaries. Marchionne moved his office to the same floor as the engineering department and the penthouse has reportedly been empty ever since.

As the automotive world’s answer to Steve Jobs, Marchionne wears only his signature outfit—a checked Oxford button-down shirt, baggy black sweater and black slacks—and characterizes himself as a ‘simple, homeless, ever-wandering metal basher.’ As per Alex Taylor III, writing in Fortune Magazine, “The principles of his management style are simple: he values merit over rank, excellence over mediocrity, competition over insularity, and accountability over promises.” With FIAT owning 181 plants in 30 different countries Marchionne truly needed a global perspective.

A dress-up doll parody:
In the Feb., 2010 issue, Car and Driver magazine opined that “about every 17 seconds, (we’re reminded that) Italians are the princes of fashion and the rest of us live in the style equivalent of Winnipeg.” They parodied Marchionne’s simplistic signature style, showing a spoof Marchionne doll that could be dressed up in a variety of outfits of which all were identical copies of the same outfit. It’s worth a google search.

Saving FIAT:
By 2004 FIAT needed €5 billion to survive. Its parent companies, Giovanni Agnelli & Co., a private company that controls two other listed vehicles, Ifi and Ifil, which together own about a third of FIAT’s shares, invested €3 billion and FIAT turned to GM for the rest. GM refused and its stake was subsequently reduced to 10%. FIAT called the ‘put option’ which would have forced GM to buy FIAT, but GM rendered it void because FIAT had sold Fidis, its financing arm and had recapitalized. In Dec., 2004 Sergio Marchionne flew to Zurich for a showdown with Rick Wagoner, then the boss of General Motors, and John Devine, GM’s chief financial officer. Wagoner blinked. In Feb., 2005 GM agreed to pay 2 billion USD to terminate the five-year-old put option. FIAT was saved!

At FIAT his open-office management style “where everyone is expected to lead” and removal of layers of bureaucracy, combined with negotiating far-more-efficient work conditions and regulations with Italy’s Communist unions returned FIAT to profitability in 2006, only two years after Marchionne took control. FIAT had new life!

Only a year later, in July, 2007, Marchionne’s team re-introduced the FIAT 500, described by Time magazine as “a tiny, very cool 21st century version of a 52-year-old Italian icon once driven by movie stars” which Marchionne called “our iPod”. FIAT found new market share in auto markets once lost, such as Mexico and Australia, entered into a joint venture in China and returned to the Canadian and American markets with the 500 in 2011. In Nov., 2012 the one-millionth FIAT 500 rolled off the production line. FIAT was on a roll.

Saving Maserati:
Under Marchionne, Maserati was split off from Ferrari in 2005 and was profitable by 2007, for the first time in decades. In 2012 Marchionne committed to a €1,2 billion production upgrade with the goal to take worldwide Maserati sales from 6,300 units to 50,000 units per year by 2015, a massively optimistic and ambitious plan. Maserati sold 15,400 cars globally in 2013, 38,000 in 2014 and expect to reach 50,000 in 2015 and 75,000 by 2018. Very impressive when one considers that Bentley (owned and well financed by VW) sold only 10,120 cars in 2013 and 11,020 cars in 2014 in the global market.

The Man in Black saves Chrysler:
In June, 2009 Marchionne again proved his global perspective and negotiating skills when FIAT Group was given (at no cost) a 20% stake in Chrysler Group as Chrysler emerged from Chapter 11 bankruptcy protection. The U.A.W. (auto unions) retirement trust was given a 55% ownership with the Canadian and American governments left with small shares. FIAT also gained access to Chrysler’s North American dealer network in return for FIAT giving Chrysler the platform to build smaller, more fuel-efficient vehicles in the U.S. and access to FIAT’s global distribution network.

But wait, it gets better! Marchionne was also able to negotiate a $6.6b financing package to rebuild Chrysler’s aging plants at rates of 11 to 12% thanks to loans from the U.S. and Canadian governments. In Jan., 2011 FIAT boosted its ownership in Chrysler to 25% when Chrysler met one of three performance milestones. In May, 2011 Marchionne was able to refinance and payoff $7.6b to the U.S. and Canadian governments thanks to low bank rates of 6 to 8%, raising FIAT’s stake to 46%, making it the largest shareholder. The government’s selloff also cut the UAW’s ownership to 41.5%. Marchionne next used the threat of a planned IPO to negotiate a better price with the UAW and in Jan., 2014 FIAT was able to take 100% control of Chrysler by buying out the U.A.W. for $4.35b and another $700m over 4 years.

In five years Marchionne had transformed two bankrupt car companies into a single viable company. Sales of Chrysler, Dodge, Jeep, Ram, and FIAT vehicles in North America rose from 1.2m in 2009 to 2.1m in 2013 and in 2014 FIAT Chrysler delivered 4.6m cars. A planned investment of $63b in plants and new models is scheduled to increase FIAT Chrysler deliveries to 7m cars by 2018.

The Italian tax exodus:
With FIAT owning 100% of Chrysler, the merged company moved its financial headquarters to the Netherlands and its corporate headquarters to England to benefit from the U.K.’s corporate tax rate of 21% rather than Italy’s 31.4% or the U.S.’s 39.1%, just as FIAT had done in 2013 for their truck and tractor subsidiary CNH Industrial. Choosing London as its corporate headquarters also dodged the politics of choosing either FIAT’s hometown of Turin, Italy, or Chrysler’s in Detroit. Ferrari may follow after their IPO.

The Palace Coup:
Marchionne and Montezemolo had run their shows independently over the years, but clashed over Ferrari not winning an F-1 championship since 2008 and not winning a single race in the 2014 season, despite having two former world champions on the team. Montezemolo had focused on schmoozing the Italian ruling classes and engaging in F1 politicking, threatening withdrawal of Ferrari from F1, so his eyes were firmly off the ball when it came to matters of the FIAT group. Montezemolo’s semi-detached management style, Marchionne’s plans to increase Ferrari’s annual production to 10,000 cars and the stock flotation of both FIAT and Ferrari were the final deal breakers. Montezemolo stepped down from the chairmanship of Ferrari on Oct., 13—tellingly, the same day on which Automobiles (FCA) had originally planned to launch its IPO on the NY Stock Exchange. Montezemolo was given a well-deserved €23m Golden Parachute on the way out the door.

Rebuilding Scuderia Ferrari:
Winning in F1 is not optional at Ferrari, but F1’s new cost cutting, no-testing programs had ended the era of ever increasing budgets and unlimited testing. After a mere two podium finishes in the 2014 F1 season, team manager Stefano Domenicali resigned mid-season to be replaced by Ferrari North America CEO Marco Mattiacci who in turn was replaced by Maurizio Arrivabene, former vice-president of global communications for Ferrari’s main sponsor, tobacco giant Philip Morris. Like Marchionne, Arrivabene understands the importance of outlining a clear battle plan to the troops and rolling heads when neccessary. With Mercedes dominating the 2014 season, Marchionne personally intervened and, when Fernando Alonso left the Scuderia to rejoin Mclaren, Marchionne and Sabine Kehm (Michael Schumacher’s manager), called Sebastian Vettel, the Red Bull driver who had brought Red Bull four Championships, bringing Vettel on board the Scuderia for 2015.

Marchionne also opined that Ferrari’s F1 engine program was the main weakness in the 2014 season and engine development became priority one. Engineering director Pat Fry and chief designer Nikolas Tombazis were shown the door, James Allison became technical chief and Mercedes performance engineer Jock Clear joined the team. F1’s cost-cutting was countered by replacing Ferrari’s 4 year old simulator with a new $6 million state-of-the-art unit, up and running in Jan. of this year. The goal for 2015 was a mere two race wins.

If the 2014 season was a dismal failure, 2015 has started well, with a 3rd at Australia for Vettel, a hard fought 1st for Vettel at Malaysia, another 3rd at China for Vettel, a 2nd for Raikkonen at Bahrain, a 3rd for Vettel at Spain and a 2nd for Vettel at Monaco. Montreal and Austria have been the first non-podium races when a spin for Raikkonen and qualifying problems resulted in a 4th and a 5th at Montreal and then a 4th for Vettel and a DNF for Raikkonen at Austria. So far it’s a modest vindication for Marchionne and Arrivabene.

Hitting the 10,000 car limit:
Ferrari has long been one of the world’s most successful and most opaque auto companies. Thanks to a recent analysis by Max Warburton we now know that Ferrari made a profit of approximately $428m on total sales of $3b with Formula One bringing in 15% of the cash flow. The F-1 team has an income of approximately $400m with $220m from sponsors and $180m from its share of F-1’s income. Operation costs result in a “net” loss of $40m after expenses, cheap in the world of global advertising. The net result is that approximately 80% of income and 90% of profit comes from building road cars. The California only brings in 20%, the F12 and FF V-12s bring in another 20% (combined) and the 458 brings in the remaining revenue.

Ferrari has been able to raise prices with every new model thanks to clever branding, long lists of profitable options and the latest-greatest “specials” such as the La Ferrari (which brought in half a billion in revenue) plus limited run bespoken “specials” such as the Sergio (only 6 built) or F60 America (10 built). While Ferrari officially built 7,255 cars for the global market, that level is based on maintaining market exclusivity. Marchionne has made it clear that his goal is to increase production to 10,000 cars a year, and no more, simply because the EPA and DOT limit fuel-economy and emission exemptions to companies that produce less than 10,000 cars per year! The question, of course, is how to get to 10,000 cars while maintaining Ferrari’s exclusivity?

The selling of Ferrari:
As a study in Italian corporate politics, even after FIAT-Chrysler spins off Ferrari, the Agnelli family will maintain majority control. According to Bloomberg, the Agnellis are setting up a “loyalty share plan” that would let the family’s holding company, Exor, and Piero Ferrari keep at least 51 percent of shareholder voting rights. Ferrari may also register its Fiscal headquarters with the rest of FCA in the Netherlands, as the Dutch are more flexible on IPOs than the U.S. Marchionne had planned to sell 10% of Ferrari by the third quarter and transfer $2.8 billion worth of cash and other assets over to FIAT-Chrysler before the IPO but under British tax law the IPO can only take place 12 months after the 12 Oct., 2014 establishment of the FIAT-Chrysler merger. After the IPO 80% of the shares will be sold to FIAT-Chrysler shareholders, with the last 10 percent going to Piero Ferrari. Maintaining a scarcity premium is critical to Ferrari’s 90%-owner FIAT Chrysler. The business has been valued by analysts at €4 billion to €8 billion, a very wide range that reflects a debate over whether it should be considered a premium car brand like Porsche or, as Mr. Marchionne believes, a high-margin luxury-goods company commanding top valuation. Max Warburton’s analysis shows that merchandising and related activities are hugely profitable but at 5% are only a small fraction of total income and do not seem to be growing quickly, an argument against Ferrari being in the luxury-goods market.

The uphill battle at Alfa Romeo:
Not all battle plans succeed. Alfa Romeo was Marchionne’s biggest headache when he took over as FIAT CEO in June 2004—and it remains so eleven years later, he said. In 2006 Marchionne said he wanted to double Alfa sales to 300,000 units by 2010 but 2010 global sales were just 115,000 units and the 2015 goal was a mere 155,000 units. Transforming Alfa-Romeo Automobiles SpA, which sold exactly zero cars in the United States in the last decade, into a brand as popular as Audi AG will be a Herculean task. To remedy that, he has committed $5b over the next five years to make Alfa Romeo the legendary sports car manufacturer it once was, and the limited edition 4C is clearly a great start. Last year 83 FIAT dealerships and 3 Maserati dealerships began to sell the 4C in the US and Canada, the first new Alfa to be offered since 1996. The ultimate goal is 300 Alfa Romeo franchises in North America. Just ten days ago, on 24 June, Alfa’s 105th anniversary, Marchionne unveiled the new Guilia at Arese, Alfa’s headquarters. An upscale 500 plus hp turbocharged V-6 sedan destined to take on Audi and BMW, the Guilia’s marketing will be emphasizing Alfa’s racing heritage. Backed by a €5 billion investment, the financial resources, technical capability and global distribution of Fiat Chrysler and a new design and engineering team in Modena, the goal is to use over-staffed and un-profitable Italian factories while returning Alfa to profitability. Marchionne plans eight new models to increase sales to 400,000 Alfas a year by 2018. Having turned FIAT, then Chrysler, then Maserati into money-makers, Marchionne may yet save Alfa Romeo. As for reviving the multiple World-Championship Rally winning Lancia in any market, Lancia was sadly euthanized last year.

It’s good to be King:
Marchionne is on track to get $72 million in total pay for 2014—mostly from bonuses and a stock award tied to FIAT’s takeover of Chrysler that led to a 61% jump in its share price, by far the highest pay package of any auto executive. In addition he will receive a 2014 bonus of €12 million plus 1.62 million FCA shares (worth roughly €23 million at today’s share price) when he steps down as CEO.

On being outside the box:
At a conference call in April of this year with equity analysts, Marchionne shared a PowerPoint entitled “Confessions of a Capital Junkie,” explaining that by cooperating on projects, the various automakers could return 2.5 billion to 4.5 billion euros to stockholders instead of wasting that money on duplicated investment and development costs.

The price tag to develop a new vehicle starts around $1b and can be as much as $6 billion if it’s an all-new car on an all-new platform with an all-new engine and an all-new transmission and new factory with nothing carrying over from the old model. Sharing common units, such as 75% of a simple 4-cylinder engine could save each company as much as $1b in development costs!

Marchionne understands that FCA must reach beyond mere stability, the next industry downturn could be fatal to a company laden with €11.4b in debt. FCA needs partners, more sales and profit; and the automaker must pay down debt—or someday find itself where Chrysler was in 2008, on the doorstep of bankruptcy.

Marchionne’s calls for consolidation have received no takers so far amongst other automakers, CEO Mary Bara at GM is one of a number of top auto industry executives who have rejected his call for integration. The lack of response has led him to possibly discuss a deal with Silicon Valley giants such as Google or Apple as they move into the next frontier of autonomous cars. If he finds any takers he will not be hard to reach as he carries five different cell phones with him in his knapsack.

To Infinity and beyond, 10,000 cars:
As part of Ferrari’s IPO Marchionne made it very clear he wants to go to 10,000 sales a year as the increased sales column will bring Ferrari’s market value up substantially. How he plans to do so may have been revealed on June 5th. Speaking to British magazine Autocar, Marchionne said it was “not a question of if but when” a new Dino will join the Ferrari fleet. The Dino will have a mid-mounted V6, like the original, but with twin turbochargers developing something over 500bhp.

Marchionne had often said that it costs $1b plus to take a car from designer’s sketch pad to a dealer’s showroom while adapting a platform from an existing model can be done for less than $300 million. Both the Maserati Ghiblis and Quattroportes use a 3.0 twin turbo V6 which will also find its way into some of the forthcoming Alfa range, thus gaining more scale for the engine. It can be assumed that the new Dino will possibly share multiple components and perhaps even the platform from the upcoming Maserati Alfieri due out in 2017. In the $200k price range the new Dino will slot in perfectly filling the gap between the top range Maserati and the California.

The new engine will probably have a displacement of just under 3.0 liters in order to evade the heavy taxes that come with engines of 3.0 or more liters in various markets. As a turbo it will help the entire FCA group meet mandatory industry-wide CO2 targets and since F1 has adopted V-6 engines Ferrari can market the link to its F1 efforts.

The Factory in Maranello can build up to 10k cars per year and Maserati has a plant in Modena with a capacity of approximately 12k units so the facilities are already in place. The Maserati plant currently builds approximately 3,000 Alfa 4Cs and the Alfieri (coupe and Spyder) will undoubtedly be built there. The Alfieri has a target price to be competitive with the 911 and F Type which may leave the market price point and capacity to build 3,000 Dinos a year, taking Ferrari to the ultimate goal of 10,000 cars a year! As an interesting academic aside, Ferrari has the rights to two different 17 digit VIN sequences, one now used starting with “ZFF” and the second 17 digit VIN starting with “ZDF” which was coincidently used on the last of the 308 GT/4 “Dino” series. Looking much further down the road, the “new Dino” could potentially

Marchionne has said he intends to stay at FIAT Chrysler through the completion of a five-year operating plan that ends in 2018. Although he is nebulous when asked of his future plans, after his hyper-kinetic career and meteoric rise in the automotive world, there is little chance he will merely fade away. Given Marchionne’s string of successes there is little doubt that the days of 10,000 Ferraris per year will happen sooner rather than later.