Ferrari Plans to Stay Exclusive but Boost Brand

Ferrari S.p.A., the sports and racing car unit of Italian carmaker Fiat that is due to be listed, is keen to protect its exclusive image while capitalising on its bright-red brand to make money in the retail business, Chief Executive Luca di Montezemolo said this weekend.

Addressing an analysts meeting hosted by Fiat, Montezemolo said brand was "the most important part of Ferrari."

"The Ferrari name has got huge potential but it has to be used in the proper way," he said, explaining the company aimed at two different markets - clients and Formula One fans.

The fans may not be able to fork out six-figure sums to buy a Ferrari but later this year they could at least buy a share or two as Fiat lists Ferrari in a bid to slash its debt to three billion euros by the end of the year.

Fiat has vowed to keep control of its prized possession and suggests the flotation could rake in about 750 million euros.

As part of keeping the exclusivity that surrounds Ferrari's cars, which attract admiring stares around the world, production is capped this year at 4,200 Ferraris and 3,600 Maseratis.

Maserati recently launched in the United States and should sell 1,500 cars there this year, Montezemolo said.

While only the super-rich might fork out for a purring, eight-cylinder engine and Formula One gearbox, thousands of motor racing fans are panting after merchandise from toy cars to video games and T-shirts branded with Ferrari's prancing horse.

"We're making 17-18 million euros in royalties," said Montezemolo, who has opened a flagship Ferrari store in the company's Italian home town of Maranello. "This is an important area and could grow in many directions."

Yet more money could come if carmakers set up an alternative to the current Formula One races, as they plan to do in 2008.

"In the medium term, we can get a bigger part of a bigger F1 cake in terms of television rights, advertising on the tracks, hospitality and merchandising," Montezemolo said.

Turning to Ferrari's financial track record, Montezemolo said sales had risen at a compound annual growth rate of 20 percent between 1999 and 2001 while operating profit had grown at an average of 78 percent.

"We hope to do even better this year," he said, adding that a first-quarter operating loss of 18 million euros was due to its usual high spending on materials at the start of the year.