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Overseas Talk

“We Will follow our Motto of Keeping Supply Below Demand!”

Issue Date - 23/06/2011
Enrico Galliera, Commercial & Marketing Director at Ferrari SpA, joined the Italian luxury carmaker just a year back, after working for over two long decades at various positions in the marketing department of the Italian pasta-maker Barilla Holding Spa. In an exclusive interview with B&E, he reflects upon Ferrari’s rough ride during the slowdown, its performances in markets like China, Japan & South Africa, its attempt to create fuel-efficient engines, and his “supply-less” motto for succeeding in new markets.

B&E: Ferrari is a very well-established brand in the luxury car segment. It believes in selling premium quality than volumes. But contrary to conventional wisdom, even the luxury car sellers suffered considerably during the recent slowdown. How was the slowdown experience at Ferrari, especially when compared to the tough times faced by players like General Motors, Toyota and other labels which focus on volumes?
Enrico Galliera (EG): As compared to what the volume players in the automobile industry went through during the economic crisis, the time was still a relatively better period for Ferrari. As we generally work with a 12-month waiting period, the economic crisis cannot be termed the worst period for Ferrari so far, though we did get hurt to an extent. To be honest, it would be wrong to say that we were totally insulated from the economic crisis. But what saved our topline during the 2008-2009 period was our entry into newer markets like South Africa, which helped the company manage overall volumes. The fact that South Africa, in such a short time has become the 15th largest market for Ferrari out of the 59 countries that we are present in, gives you a fair idea of how the market played a saviour.

B&E: So do you plan to enter other countries in the African continent, just in case you would require more cushion if there is another slowdown soon?
EG: Actually, yes. The response we got in the South African market has motivated the company to expand to other African countries as well in the near future. We already have Ferrari owners in markets like Mozambique, Angola and Nigeria, and I am sure, given a tough business scenario in the near future, these emerging markets will serve us well.

B&E: China is another market which has over the years, impressed luxury automobile sellers. Your company has spent 7 years in China, but it has all been rather silent there. Has your time in China been a rather dull one?
EG: No. We have seen huge growth and penetration in the Chinese market over the past few years. China has been and is a very important market for Ferrari. Though I confess that after entering China in 2004, we did take a few years trying to understand the market. But today, we are geared-up to increase our volumes there as well. To quote a figure, Ferrari sold over 300 units in China in 2010, which market a y-o-y increase of 40%. That for us is phenomenal. And going forward, we only expect the sales to rise higher. It was a slow start, but we are catching up very fast.

B&E: Next, to Japan and Egypt – what degree of pressure do natural disasters like the Tsunami in Japan and unforeseen events like the unrest in Egypt put on the sales of your company?
EG: Such incidents for that matter, are surely bad signs for any luxury carmaker. Japan is undoubtedly one of the most important markets for Ferrari. But trouble there had begun even before the catastrophic events unfolded in April this year. Even before the Tsunami, there was a slowdown in sales due to the stagnant situation of overall economy of the country. With the Tsunami occurring, our problems in Japan have only been aggravated. The company is today really concerned about Japan and how long it will take for such an important market to recover. At the same time, unrest in Egypt and several Middle-Eastern countries is also a major concern for the company.

B&E: There is also some speculation that Ferrari is trying its hands at fuel-efficient cars. Is this true? And if it is – is this the next big thing that we can expect the company to excel at?
EG: True. The dealers present in high-volume fetching markets like US and Japan have been requesting us to develop products that are high on fuel-efficiency and low on carbon emissions for a long time now. We are looking at options under this umbrella and we are more than willing to come up with such products as long as they meet our specific requirements.

B&E: Unlike Maserati, Ferrari has a policy of not marketing its products to the consumers directly. Also, it is said that Ferrari pours lesser units into the market than is actually demanded. Will you bend the rules to an extent when you enter emerging markets?
EG: You rightly mentioned – we do not advertise in all the markets we are present in and it will remain the same in the emerging markets as well. We will not be aggressive. We will just want to ship, show and deliver our product to the Indian customers. The motive of the strategy is to retain the exclusivity of the brand in emerging markets. This means that we will not even offer discounts on our offerings to push our products to markets. We will just deliver the right count of cars needed in the market, always being careful about actually – as we like to say it – delivering one car less than is demanded, in order to keep the demand high, and exclusivity in place. In US, which is our biggest market, we sell close to 1,600 cars every year, and it is a very exclusive offering there, because the demand there is actually higher than supply. We expect a similar reaction in the new markets. We will follow our motto of keeping supply below demand!

B&E: A question on India – Renault entered India in a tie-up with M&M. Surprisingly, you entered this market in a tie-up with the lesser heard of Shreyans Group. What is it that convinced you into joining hands with this group?
EG: The decision to enter India was taken a few years ago. In 2008, we decided to take a tour of India in order to learn more about the market. We finally took the decision to enter India in 2011. We took the time because we wanted to be sure of finding the right partner to do so; because we were just not looking for someone who was investing money, but someone who can represent our brand in India. See, India is a very important market for Ferrari and we hope to sell more than 50 units in the first year itself. Having said that, the right partner proved the first right step for us.

Pawan Chabra           

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