Why Ferrari Chief Has Mellowed; Montezemolo’s Passion Is Still There, but He Takes a Philosophical Approach

September 25, 2013, 4:55 p.m. ET

Why Ferrari Chief Has Mellowed

Montezemolo’s Passion Is Still There, but He Takes a Philosophical Approach



Ferrari chairman Luca di Montezemolo in the team’s pit during the third practice session of the Italian Grand Prix at the Monza circuit on Sept. 7.

MARANELLO, Italy—For the past 22 years, a third of the company’s history, Ferrari SpA has been in the hands of chairman Luca Cordero di Montezemolo. A successful, outspoken businessman who is often mentioned in discussions of high-level Italian politics—but hasn’t held public office—he is about as close as you can get to Italian royalty these days. But Formula One is still in his blood. Montezemolo, after all, was appointed Ferrari’s sporting director in 1974 by Enzo Ferrari himself. And, during his tenure, the team won two world titles. Now, from his office overlooking a constant parade of supercars, he isn’t quite as obsessed as he was. There was a time, he said, where he could only think, “If Ferrari comes second, it’s a disaster. It’s a disaster! We are obliged to win.”At 66, he is mellower. Although that’s not to say he isn’t involved with the sporting side: earlier this season, he gave driver Fernando Alonso a public dressing-down for criticizing the car. Earlier this month, he also fanned the fire by telling reporters he believed Ferrari’s new addition for next season, Kimi Raikkonen, could outperform Alonso next season.

Over the summer, Montezemolo sat down with The Wall Street Journal here to discuss Ferrari’s legacy of Formula One racing (it’s everywhere), the challenges facing a car company that produces only 7,000 cars a year (on purpose), and selling Ferraris to soccer stars (he would rather not).

The conversation has been edited for length and clarity.

On Ferrari’s legacy of racing infusing every aspect of the company…

There is no other company in the world with such a long history in racing. There is no other company, or team, in the world that has been so successful. There is no other company, or team, that has been since 1950 until now always present in the good and in the bad moments… But Ferrari has been always there. Now, why this?

One reason is, for sure, this for us is promotion, communication. We do not invest in advertising… So racing is the best advertising for Ferrari. Second is that Formula One, since I’ve been here, is the best advanced research center for Ferrari. And I can give you a lot of examples.

The latest one, with La Ferrari [released this year] is with the [Kinetic Energy Recovery System] of the electric engine. We are the first, in the early 90s, to introduce the Formula One gearbox without a clutch. We have done the F50 in the 1990s that was the first car entirely made of carbon fiber—not only the chassis, but the gearbox, suspension.

On how the integration of KERS, which was originally designed to give F1 cars a burst of speed at the touch of a button, comes about in cars for general sale…

It’s very simple. Since 23 years, I put three people from GT and three people from the racing department to dialogue every day… And despite ridiculous rules [governing F1 technology] we’ve been able to always to try to transfer something. In terms of materials, or in terms of electronics, or in terms of engines. So there is day by day a transfer of ideas, transfer of experience, transfer of technology. So this is how we work.

On his decision to call Ferrari’s latest special-edition car, LaFerrari, a decade after the Enzo…

After Enzo—I decided to call it “Enzo Ferrari”—it was difficult. I cannot call it, “God.” LaFerrari means the Ferrari. The excellence. In this car, we put everything we are able to do. Our extreme technology, extreme experience, extreme capability. And this has been the first Ferrari, totally designed in our design center. Not by Pininfarina, not by anybody outside…

This car is the first hybrid, an extreme hybrid, because I will never do an electric car, but I want to do a hybrid. But the quickest in the world.

On manufacturing just 7,000 cars a year…

I’m proud to say that this year, I told to my people, “I want to do less cars.”

Why? Because for me, it’s important that Ferrari will remain a dream. I always repeat to my people, “We don’t sell a car, we sell a dream…”

So we do less cars, but we want to make more money and dramatically increase the value of the cars, of the used cars… Even places maybe where we don’t sell a lot of cars, we have important collectors. So [we want to focus on the] club of collectors, making money on restoring and also giving the certificate of authenticity.

On the challenges of selling Ferraris in the midst of a European financial crisis, both in terms of customers and public image…

Today, particularly in the crisis, you need to feel free, to have the freedom to use your car in a proper way.

Then we have also done cars that are far less “showoff” than before. The California [first manufactured in 2008] is like a Porsche, but with different performance. With a brand—and I respect Porsche—but the Ferrari brand is more exclusive… We never do SUVs, we never do four doors, and we never exceed 7,000 cars per year. And 7,000 means 7,000.

On also trying to keep Ferrari exclusive…

I always say to my people, “If you don’t sell a Ferrari to a football player, you make a big present to me.” Really. Because they buy to just show off. I don’t like.

On the need, simultaneously, to develop new markets…

I sell 3% of my production in Italy. Three percent. We are used to selling at least 10% [at home], like every other company. How can a company survive with a domestic market of 3%?

But thank God, in the last 10 years, China, Taiwan, we send 200 cars a year to Singapore, and the United States.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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