Fiat Chrysler’s plan to spin off Ferrari as a separate business to fund future investment is on the starting grid after the latter formally filed for an initial public offering on the New York stock exchange.
The luxury carmaker is aiming to become a €10bn (£7bn) separate company, Ferrari NV, by early next year.
The current Fiat Chrysler subsidiary said in the filing it believed that “as a standalone company with an iconic brand name, we will be better positioned to promote and extend the value of our brand, maintain our heritage, attract and reward technical and management talent and further enhance Ferrari’s position among the world’s premier luxury lifestyle companies”.
Sergio Marchionne, the chief executive of Fiat Chrysler, first announced plans to reshape the corporation in late 2014, but the listing has been delayed.
The company expects to list 10% of the shares, and later distribute a further 80% to its own shareholders, completing the separation. The Ferrari family will retain a 10% interest, held by Piero Ferrari, the son of the firm’s founder, Enzo Ferrari.
Marchionne is looking to reduce Fiat Chrysler’s debt and fund a €48bn investment programme to boost some of the company’s other major brands worldwide: Jeep, Alfa Romeo and Maserati. He said earlier this month that he expected the listing to value Ferrari at more than €10bn.
Ian Fletcher, principal analyst at IHS automotive, said that the valuation was near the top end of others’ estimates: “It depends ultimately how much you value the brand. The basis of this listing is that brand’s worth: it’s not just sports cars now, its licensing it for everything from keyrings to theme parks.”
The Ferrari brand has become one of the world’s most recognisable, yet exclusive leading luxury brands, marrying Italian design and engineering with a reputation for innovation underpinned by the division that runs its Formula One racing team, Scuderia Ferrari, the most successful in the sport’s history. It currently sells eight models and delivered 7,255 cars in 2014, netting revenues of €2.8bn and profits of €265m.
Ferrari’s reputation for exclusivity and scarcity is deliberately maintained by low production volumes and long waits for the delivery of its cars – some of which sell for more than €1m each – and the company has been funnelling more of its cars to rich Middle Eastern and Chinese buyers in recent years to keep the stock rare in Europe. However, Ferrari expects to expand its brand into new luxury goods and develop more theme parks in the backyards of wealthy consumers, of the kind it has already built in the United Arab Emirates.
The new Ferrari holding company will be based in the Netherlands, but Marchionne has promised that operations will remain at its Maranello base in northern Italy, and the company will pay taxes there.
Fletcher said Ferrari may consider developing a slightly cheaper model, although still costing €100,000 plus. “If you sold 10,000 units a year that would still be exclusive - how many handbags do Louis Vuitton and Chanel sell? As Ferrari’s bosses have said, if you sell one less than the market wants, you’re still exclusive.”
Meanwhile, Fiat Chrysler will look to turn round the rest of its European business and make new vehicles, Fletcher said. “Marchionne wants to reach out to what they see as an untapped market for premium cars beyond the German brands, introducing more Alfa Romeo models to sell that Italian flair.”
