Ferrari’s expansion and diversification cannot be stopped. Presently, it already runs the Ferrari World in Abu Dhabi, which is home to the fastest and highest roller coaster in the world that is 170-ft. high and runs at a speed of 75 mph. A similar theme park, Ferrari Land, is also set to open in Barcelona, Spain by 2017.
Furthermore, Ferrari has recently entered into an agreement with BAIC Group, a state-owned holding company of various automobile manufacturers in China, to open another theme park in the country.
According to speculations, another two theme parks are about to sprout in North America. The Ferrari World in Abu Dhabi began its operations in 2010. It serves as a tribute to Italian Francesco Barracca, the World War I (WWI) army pilot whose plane’s prancing horse serves as the company’s emblem.
Why Ferrari Invests in Theme Parks
Apparently, the company’s extended luxury business, which includes perfumes and luxurious jackets, is not doing well. Six months following the initial public offering (IPO), Ferrari is way behind its luxury brand competitors such as Prada and Hermes. Kepler Cheuvreux analyst Rhomas Besson said that the company’s fashion line is lagging from the likes of LVMH and Richemont. As ADW Capital Partners Adam Wyden puts it, the company “has an identity crisis” since it is suddenly transitioning from supercars to high-end products.
As a result, Ferrari seeks to capitalize more on North America, one of its leading markets, by launching a new theme park. Its amusement park operations are likely to compensate for the negative impact of its luxury goods business. Milan Polytechnic Marketing Professor Giuliano Noci elaborated that the company is actually a paradox, saying that Ferrari is such an iconic supercar brand that it is difficult for it to establish an identity beyond the automotive industry.
In order to remain competitive in the market, Ferrari is actually working to reorganize its board of directors by adding more luxury goods experts in its core. The new members of the board of directors include LVMH Moet Hennessy Louis Vuitton SE Executive Vice President (EVP) Delphine Arnault, Agnelli family members John Elkann and Lapo Elkann, and Jardine Matheson Holdings Ltd. Deputy Managing Director Adam Keswick.
Moreover, Safilo’s Luca Fuso also joined the team as a replacement for former Brioni chief Andrea Perrone, whose primary role was to extend Ferrari’s merchandising and brand licensing.
The entry of Ferrari in the luxury goods industry can generally be attributed to the sales pitch of Ferrari Chairman Sergio Marchionne to shareholders following the company’s split from Fiat Chrysler Automobiles (FCA). Marchionne believes in Ferrari’s ability to achieve its goals as long as the transition is carried out thoroughly.
Together with John Elkann, Marchionne has consistently been looking for potential partners as Ferrari seeks to expand its product portfolio by the 70th anniversary of the company in 2017.
Accordingly, Marchionne is faced with greater responsibilities to implement Ferrari’s prospects as its long-time CEO Amedeo Felisa is believed to retire soon.