Fiat ‘consider’ selling part of Ferrari?

Negative Camber

Oct 4, 2010

The New York Times story this week from David Jolly suggest that Fiat would consider selling part of Ferrari but it’s not in the cards at the moment. As Fiat angles to increase its ownership in Chrysler to 35% in 2011, the Italian daily Corriere della Sera suggested that it could sell up to 85% of its holdings in Ferrari to fund the acquisition.

This is apparently not the case according to Fiat and Chrysler chairman Sergio Marchionne who says that the funding for such an acquisition is in place without the sell of Ferrari stock. According to Jolly, the chairman said:

TOP NEWS

"
“No, we have enough financial resources to do everything we have to do,” Sergio Marchionne, who heads both Fiat and Chrysler, said during an interview at the Paris Motor Show.
“We would consider selling a part of Ferrari,” Mr. Marchionne added, “but it’s not in the cards now, and I have no project on my desk.”
“With Ferrari,” Mr. Marchionne said, “we’re not selling cars, we’re selling works of art.”
"

There is an interesting twist on the Mubadala investment in Fiat and sponsorship of Ferrari. Mr. Marchionne said:

“We’ll either buy them out or they’ll convert their shares into something else.”

This is the very company that Ferrari are working in conjunction with on Ferrari World in Abu Dhabi. This prompted another quote from the NYT story from Luca di Montezemolo:

“will remain for us a very important industrial partner,”

I am not sure what that means but perhaps converting stock to something else like sponsorship or something similar may make sense. As the story says, Ferrari have significantly boosted their efforts in brand and marketing initiatives. Ferrari World is a very large, expensive, tangible example of that effort. With double-digit margin growth in 2010, it seem Fiat would be silly to consider selling their interest in Ferrari but then car companies do odd things don’t they?

What does all of this mean? I would say that Ferrari’s F1 program is not going to be lacking funding any time soon and that can’t be good news for Red Bull, Mercedes, McLaren and other teams working hard to defeat them. The resource limitation agreement may be a saving grace for some of the other teams working with smaller budgets as defined by the board members.

A tip of the hat to Mr. Jolly for a nice article summing up the Ferrari machine and Fiat’s intentions.