Ferrari has spent years engineering its business to make much out of very little.

Ferrari

In Maranello, Italy, the assembling line is rumbling at full speed once again. The company came through a COVID lockdown with plenty of momentum and, should the state shut down again, Ferrari will be as rattled as a Milanese cobbler on a smoke break.

The secret is scarcity. Ferrari’s profit engine has always run lean on product. The company functions, essentially, like one of the turbos on its sports cars: take a trickle of fuel, squeeze it together with a bunch of compressed hot air and … forza!

A slowdown in sales just boosts demand. In October, Ferrari orders ran 30% ahead of the first quarter pace. And though a seven-week shutdown wiped out 2,000 would-be vehicles, the company said full-year profit will be at the high end of its forecasts. Orders for the most expensive Ferrraris have surged and the company’s shares have more than doubled since a low in March.

None of this is an accident. Ferrari has spent years engineering its business to make much out of very little. Even after the company wend public in 2015, executives only dialed up production a touch – to roughly 10,000 vehicles a year – and spread those more widely around in the world. In the future, Ferrari will add SUVs to the mix, but to brand purists those won’t count.

For decades, buying a Ferrari has been something like getting a table at Rao’s; you’ve got to hustle for it and it takes more than just money. Most Ferrari dealers have a long list of potential buyers for new models. To move up – or to get on it in the first place – it helps to own a Ferrari already. Flippers are black-balled and first-timers are quietly encouraged to buy used. There’s a second, more exclusive list in Maranello that metes out the million-euro-plus limited-edition releases.

All of this is to avoid what academia calls a “negative net externality effect,” whereby the more something is sold, the less it is valued. In Ferrari-land, this roughly translates to: “my car better be the only one in town.”

Smart luxury brands do, in fact, move down market, but generally only with new, differentiated brands. In the 60s and 70s, Ferrari did this with its “Dino” line of mass production sports cars. Today, it essentially does this with swag — a seemingly endless line of Ferrari badged slippers, surf boards and other be-stallioned tchotchkes.

Meanwhile, Ferrari has kept its R&D carefully tuned as well. In the first three quarters of this year, the company funneled one out of four revenue dollars into its skunkworks, a slightly larger share than the year-earlier period. One result is the Roma, a 611-horsepower crate of opulence that will slot in next year at the base of the Ferrari lineup. The $219,000 starter-drug is sure to keep the demand side of the economic equation boosted for years.

Hannah Elliot, Bloomberg’s arbiter of all things fine-grained and high horsepower, likes it more than Porsche’s newest 911. There’s a notable difference though: Porsche will make tens of thousands of those sports cars, while Ferrari rolls out hundreds of its Romas … and slowly at that.

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