Ferrari to SUVs: Drop Dead?

An IPO shall not tame the prancing horse.

Fabrice Coffrini/AFP/Getty Images

A cursory glance at Ferrari’s initial public offering shows it may be preyed on by blood-sucking hedge funds, activist investors and all sorts of characters who otherwise don’t appreciate hand-built exotic cars. And indeed it may. But that won’t stop Ferrari from being Ferrari, undoubtedly the most famous sports car name in history.

Come early 2016, when Fiat-Chrysler unleashes Ferrari from its corporate stable of American and Italian brands, Ferrari will only have sold up to 10 percent of its value, or approximately $1 billion. Piero Ferrari, the surviving son of Enzo, will keep 10 percent. The Agnelli family, which founded Fiat and absorbed half of Ferrari into that automaker in 1969, will retain 24 percent. The remaining two-thirds will go to existing Fiat-Chrysler investors. As for voting rights, Ferrari and the Agnellis, under their Exor holding company, will retain a 51-percent majority.

What does it all mean? Ferrari won’t be sent on a suicide mission that would plaster its prancing horse badge on SUVs, sedans and all manner of highly profitable but arguably brand-softening vehicular bumbershoots. In its SEC filing, Ferrari said it would “continue to pursue a low volume strategy in order to maintain our reputation for exclusivity,” even in the face of investor pressure.

Specifically, the company refuses to build more than 10,000 cars a year. In 2014, it sold 7,255 new cars, a 34-percent growth over the past decade. But as an independent automaker, Ferrari would also be subject to the most stringent emissions regulations if it built 10,000 cars or more. While the company hasn’t backed down from its pledge to turbocharge or electrify all of its coming models, it does not want more unnecessary restrictions on its sports cars—which are not exactly spewing fumes like 15,000-mile-per-year Camrys and Fusions.

Ferrari is small and likes it that way. Used Ferraris can be pricier than new ones, given it can take one, two or more years to realize an order. Limited-edition hypercars such as the LaFerrari are sold on an invite-only basis with resale stipulations. You’re either in the car or tapping your feet by a red velvet rope. That’s Ferrari. And judging by its specific language and corporate structure, Ferrari will not be tolerating anything less. Meno male!