Halftime Leisure

Luca Cordero di Montezemolo Ousted, My World Is Crashing Down

September 15, 2014


Luca Cordero di Montezemolo, Ferrari icon and resident nut job, has stepped down from his position of chairman at Ferrari. He will be replaced by Sergio Marchionne. The FIAT-Chrysler alliance is now, in the words of the “Financial Post,” a “one man show.”

It’s the end of an era. di Montezemolo’s importance to Ferrari feels like the second coming of Old Man Enzo himself. Enzo Ferrari hated the “side business” of making client cars. To him, racing was everything. He was so emotionally invested in races that he had to watch them in seclusion, lest his emotions get the best of him.

di Montezemolo has flitted in and out of Ferrari’s Maranello headquarters for the second half of the company’s existence. He was appointed to Ferrari in 1973 after its acquisition by FIAT. Just a year later, Old Man Enzo had put him in charge of the Scuderia Ferrari Formula 1 team, Ferrari’s penultimate raison d’être.

What followed? As they say, the rest is history. The legendary Nikki Lauda, who is now at Mercedes, began racing for Ferrari in 1974. He also told Enzo Ferrari that the car is “a piece of shit” after the fateful first test of that year’s F1 car, which was included in “Rush.” Perhaps di Montezemolo had a larger hand in this than we give him credit for…

Even so, once di Montezemolo brought Lauda onboard, Scuderia Ferrari won the Constructor’s Championship in 1975, 1976, and 1977. Then, FIAT realized that this guy knew which way was up and tried to cop his magic for the proletarian. Things were all right for a while. There were white Testarossas in Miami Vice, LOL, no complaints.

But by the early Nineties, Ferrari was bleeding money. Gianni Agnelli, still in charge of FIAT, put his friend Luca di Montezemolo back in the Ferrari wringer–and Montezemolo did brilliantly. Almost immediately, he rolled out the poster cars for the Nineties banker set: the 355 and the 456, as well as making merchandise deals that have since become an important part of the Ferrari poseur wardrobe.

Several years after his reinstatement, di Montezemolo turned his attention to Scuderia Ferrari. He assembled a dream team of players:

But in 1993, he had brought in Jean Todt to run the F1 team. Together, Todt and Montezemolo convinced Michael Schumacher to come to Ferrari for 1996, then added the remaining pieces of the “dream team”technical director Ross Brawn and aerodynamicist Rory Byrne.

Scuderia Ferrari began to dominate. Mercedes may be unbeatable this season, but between 1999 and 2008, there were only two years Ferrari did not take the Constructor’s Championship.

 

Lately, Scuderia Ferrari just can’t catch a break. di Montezemolo has been breaking a lot of televisions. After a dismal season, the F1 team has been consistently beat out by Mercedes, Infiniti Red Bull Racing and even Williams-Mercedes, the latter of whom has staged a massive comeback this season (although that’s probably just due to the exquisite livery).

Both men are immensely savvy when it came to creating desire. For Enzo, it was winning races. For Luca, it was making Ferraris so inaccessible, so rare, and so hierarchical that you literally cannot buy a new Ferrari unless you are Somebody or a longtime customer.  I’m sure you’ve heard the stories about how people are paying $750,000 for the privilege of having the chance to spend another US$1.77 million to buy the car itself. Ferrari doesn’t play games. There’s an article from “Automobile Magazine” about how to get a new Ferrari, and the stories are wild.

They [Ferrari] are kind of noted for making you buy a used car to get into the game. They are very arrogant. They think they’re doing you a favor by selling you a car. It’s just the opposite of what a manufacturer/customer relationship should be. That was my experience.

And, central to Ferrari’s brand identity is winning. Winning in F1, manipulating their cars’ stats in magazine reviews, and in being the (rightly deserved) star of the FIAT empire. Despite increasing Ferrari’s profitability more than 300% in ten years, Ferrari isn’t winning, and di Montezemolo has his hands tied.

What’s most ironic in this entire ordeal has been di Montezemolo’s reaction to his successor:

“Ferrari is now American,” which represents “the end of an era,” Montezemolo told close associates last weekend, Il Corriere della Sera reported Sept. 8.

Even though it’s exactly what di Montezemolo did with Ferrari himself in the 1990s:

…with the addition of the Maserati to Ferrari showrooms, consumers now stand a better chance of finding a car they might be able to afford when they come in to gawk at those Ferraris. Says Standard & Poor’s dri auto analyst Pietro Frigerio: “Montezemolo has imported the idea of customer service from the U.S.”

But let me return to the exclusivity issue. Scuderia Ferrari will survive, but what may disappear is Ferrari’s exclusivity. Ferrari has built its name on democratizing the knowledge blackout to (most) consumers, media outlets, video game makers and finance organizations alike. Time and time again, luxury companies have proven that the ultimate form of desirability is inaccessibility. Too expensive, unavailable, and secretive has worked for companies as widespread as Ferrari to French luxury brands Goyard, who refuses to speak with media, and Hermès, who is legendary for the unattainability of their iconic purses. Ferrari, much in the same way, contributes to the lore and the aura of mystery surrounding its cars–even if you have the money to buy a Ferrari, you probably will not be able to at first attempt.

Regardless of whether or not you agree with this policy, it is hard to find fault with it as a business strategy. By severely limiting supply, Ferrari has created almost endless demand. This is all set to change, if Sergio Marchionne is allowed to have his way with Ferrari.

Marchionne, who’s currently the Executive Chief Officer at FIAT, the mass-market brand of FCA, is preparing for the impending New York stock market debut later this month. In an American traded, shareholder-driven company, di Montezemolo’s antics are more difficult to justify. Even so, they’ve worked.

Maserati seems to be pioneering the luxury brand-expansion that Marchionne wants to institute at Ferrari. In 2013, Maserati rolled out their new high-end sedan, the Quattroporte (an imaginative name) as well as the lower-end Ghibli. These cars, judging by the amount of them I see on M Street, have already begun to percolate into average Americans’ lives. CNET said it perfectly after reviewing the Ghibli, though:

The 2014 Maserati Ghibli S Q4 is a more approachable, affordable Maserati, but at this price point it both loses a bit of its mystique, and faces some very stiff competition.

Plagued with the legacy of Fix It Again Tony and this Alfa Romeo video,

Fiat-Chrysler Automobiles doesn’t have much more than mystique to trade on. Marchionne seems to want to institute the same mindset at Ferrari:

Marchionne, who will become Ferrari chairman on Oct. 13, said he plans to gradually increase production of vehicles like the $1.3 million LaFerrari to keep pace with growing numbers of ultra-wealthy consumers.

“If that class increases, we should be able to follow them,” Marchionne said today at an event in Balocco, Italy. Otherwise, “the waiting list will become too long, and people get tired.”

But people haven’t tired of Ferrari (Scuderia Ferrari being the exception). Scuderia Ferrari, let’s keep in mind, is not doing that badly. Fernando Alonso, Ferrari’s number one driver (sorry, Kimi), is fifth in the Driver’s Championship standings and Ferrari is fourth in Constructor’s Championship. It’s not as if they are Toro Rosso or even Marussia (with whom they share an engine). Technical woes notwithstanding, Ferrari’s political situation, has been described as a “Piranhas Club” of team owner politics. After losing team principle Stefano Domenicali, who di Montezemolo brought in, the team was running out of scapegoats. It seems they just decided to amputate.

Ferrari may never be the same. Only time will tell.



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