Ferrari Owners and F1 Fans Get Some Troubling News

(Bloomberg Opinion) -- During its more than 70-year-long history, Ferrari NV has guarded its sports car and racing heritage like a priceless jewel. It’s been careful not to tamper with a winning formula, having leaders like founder Enzo Ferrari and Luca di Montezemolo rule the company for decades.

So losing two chief executive officers in two years — first with the death of Sergio Marchionne in 2018 and now with the resignation of Louis Camilleri after he was temporarily hospitalized with Covid-19 — must be deeply unsettling for ferraristi (Ferrari owners), the tifosi (supporters of the Scuderia Ferrari F1 racing team) and Ferrari shareholders.

Ferrari chairman and Agnelli family scion John Elkann, who’ll step into the CEO role on an interim basis, won’t struggle to find people who want the position. Though it comes with huge pressures, running Ferrari is one of most desirable jobs in global business. And besides Ferrari’s disappointing performance in F1 this season, Camilleri is handing over a company in otherwise fine fettle.  

Yet his successor faces some unique and daunting challenges, including the planned 2022 launch of Ferrari’s first SUV, the Purosangue, and the company’s longer-term shift to electrification. Both worry Ferrari purists. These transitions demand a unique skill set and there’s no room for error.  

The stock has quadrupled since the 2015 IPO and is priced at an eye-watering 44 times next year’s anticipated earnings. If Ferrari should ever falter, there’s a long way down.

When Camillerri was appointed, I was skeptical whether a tobacco industry executive was the right person for the job. But, as an owner of several Ferraris himself, he showed a keen appreciation for the sensitivities of the role.  

Last year Ferrari launched a partnership with Giorgio Armani SpA to develop a line of branded fashion products — an area the company has struggled with in the past — to complement its luxury cars. It also unveiled five new models that same year, including the SF90 Stradale, the company’s first series production hybrid. Such a rapid expansion of the line-up was risky but Ferrari purists were more than satisfied.

The company’s performance during the pandemic has shown it’s a cut above the rest. Covid-19 wrecked the balance sheets and sales of rivals like Aston Martin Lagonda Global Holdings Plc and Mclaren Group Ltd, forcing both to raise new equity. In contrast, Ferrari’s order book and finances have remained resilient.

Even before Covid, these rivals were struggling to boost volumes without diminishing the perceived exclusiveness of their brands, whereas Ferrari has made balancing supply and demand look easy. Its industry-leading profit margins reflect that success.

Given the brand is closely linked to 12-cylinder combustion engines, Camilleri’s reluctance to hurry the launch of a fully electric Ferrari is understandable. However, his successor won’t be able to duck the challenge forever — the regulatory environment is becoming increasingly hostile to manufacturers of gasoline vehicles.

Deciding what parts of an electric Ferrari must be produced at the company’s Maranello headquarters and what can be outsourced isn’t straightforward. Ferrari will also have to find a satisfying substitute for its engines’ signature ear-splitting growl.

Get it right, and his successor will add their name to the company’s storied history and reinforce the company’s premium stock market valuation. Ferrari fans and shareholders will be watching their every move.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.

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