Latest / Boardroom Conversations with Fexingo: CEOs, Strategy, and Corporate Leadership Explained / How the Ferrari Board Manages Brand Scarcity
Transcript
- Lucas: Ferrari delivered just over 14,000 cars globally in 2025. That's fewer than Toyota makes in a single day. And the board wants to keep it that way. Luna: Fourteen thousand cars, and a market cap above $80 billion. That is one of the best ratios of units to value in the world. Lucas: Exactly. Today we're talking about how Ferrari's board manages brand scarcity — not as a marketing gimmick, but as a deliberate governance strategy that goes back to Enzo Ferrari himself. Luna: So the board is actively capping production. That seems counterintuitive for a public company that's supposed to maximize shareholder returns. Lucas: It sounds counterintuitive until you look at the numbers. Ferrari's operating margin has consistently been above 20 percent for years. Compare that to mass-market automakers who scrape by on 5 to 8 percent. The board understands that if they flood the market, the exclusivity premium evaporates. Luna: And that premium is baked into every car. The average selling price for a Ferrari is now well over $400,000, and that's before you add options. Lucas: Right. But the scarcity discipline isn't automatic. It has to be enforced by the board, quarter after quarter, especially when analysts ask: 'Why don't you just build a few thousand more and pocket the extra revenue?' Luna: Did they ever give in? I know there was pressure after the IPO in 2015 when the stock needed to prove itself. Lucas: They held the line. In fact, when Ferrari listed on the New York Stock Exchange — ticker symbol r a c e — the board explicitly stated that volume growth would be 'organic and measured,' which is code for 'we are not going to chase units.' Luna: And that's rare. Most luxury brands—like BMW or Mercedes—have volume models that make up the bulk of sales. Ferrari never went there. Lucas: That's because Enzo Ferrari set the rule early. He famously said: 'Ferrari will always deliver one car fewer than the market demands.' That became the founding principle of the company's culture. The board's job today is to protect that principle from short-term pressure. Luna: How does the board actually enforce it? I mean, it's one thing to have a principle, another to say no to a dealer network that could sell twice as many cars. Lucas: They do it through a combination of governance mechanisms. First, the board approves an annual production ceiling as part of the strategic plan. Second, they tie executive compensation to margin targets and brand health metrics — not revenue growth. And third, they have a unique ownership structure that insulates them. Luna: The family control piece. Piero Ferrari, Enzo's son, still owns about 10 percent of the company and sits on the board. Lucas: Exactly. Exor, the Agnelli family holding company, controls around 24 percent. So you have two long-term-oriented shareholders who together own more than a third of the voting power. That gives the board cover to make decisions that might depress short-term unit sales. Luna: So the board is essentially a guardian of the brand's DNA. That's a very different role than at a company like General Motors, where the board is mostly focused on quarterly earnings and market share. Lucas: Completely different. And the Ferrari board composition reflects that. You don't see many former auto executives. Instead, you get people from luxury goods, finance, and even Formula 1. The current board includes the former CEO of Louis Vuitton and the former CFO of Prada. People who understand scarcity as a value driver. Luna: Speaking of Formula 1 — the racing division is actually a separate entity in some ways, but it feeds the brand halo. The board has to manage that relationship carefully too. Lucas: Yes. The racing team is a cost center — they spend hundreds of millions a year pursuing championships. But that spending is approved by the board because it directly supports the brand's exclusivity. You can't sell a $400,000 car without the racing pedigree. Luna: So the board treats marketing spend differently than a typical automaker would. For Ferrari, racing isn't an expense; it's an investment in the scarcity narrative. Lucas: Right. And that narrative extends to how they manage the product lineup. When Ferrari launched the Purosangue SUV in 2023, there was a lot of hand-wringing from purists. But the board made sure it was limited in volume and that it looked unmistakably like a Ferrari, not a Range Rover. Luna: And they also said they'd never make an electric SUV, at least not in the near term. That's another scarcity play — they're letting other brands fight for the EV market while Ferrari stays rare. Lucas: It's a strategy that has paid off handsomely. Ferrari's stock has outperformed the S&P 500 by a wide margin since the IPO. And it's done so with essentially flat unit volume. The growth has come entirely from pricing power and brand strength. Luna: Which brings us to an interesting point about board accountability. How do you measure success when the company deliberately refuses to grow volume? Most boards would be nervous about that. Lucas: They measure success through a metric called 'brand heat' — a combination of waiting list length, resale value premium, and customer satisfaction. Ferrari's waiting list is over two years long for most models. On the secondary market, a used Ferrari often sells for more than the original sticker price. Those are the metrics the board watches. Luna: That's a completely different dashboard than the typical automotive board. They're not looking at days of inventory or market share. They're looking at scarcity premiums and exclusivity ratios. Lucas: If these conversations have moved your work forward in some small way, I want to be honest about how this show stays going. A handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making so many episodes like this one. Luna: Yeah, it's a small group that keeps it ad-free. We don't run sponsors or sell data. It's a direct listener-supported model, and that lets us pick topics without any outside pressure. Lucas: So back to Ferrari's board. One of the most revealing moments came in 2025 when the board had to decide on the future of the internal combustion engine. Most automakers are going all-in on electric. Ferrari's board chose a different path. Luna: They announced they would keep V12 engines as long as regulations allow, alongside hybrids. That was a board-level decision, not just engineering. Lucas: Exactly. The board recognized that for Ferrari customers, the combustion engine is part of the brand's soul. Eliminating it too quickly would dilute the scarcity of the experience. So they committed to offering both powertrains for the foreseeable future. Luna: That's a bet on brand over compliance. A lot of boards would just follow the regulatory roadmap and phase out combustion engines by 2030. Ferrari's board said: we'll adapt, but on our terms. Lucas: And that's the through line. The Ferrari board doesn't see itself as a rubber stamp for management. It sees itself as the custodian of a scarcity model that has worked for over 75 years. Every decision—production caps, engine strategy, racing investment—gets filtered through that lens. Luna: So what's the risk? Is there a scenario where the scarcity model breaks? Lucas: The biggest risk is a decision that damages the brand's desirability. If the board ever approves a car that feels generic, or if they allow too many variants that confuse the lineup, the waiting list could shrink. That's why the board has been so cautious about expanding into new segments. Luna: The other risk is the transition to electric. Even with a hybrid strategy, if Ferrari's first full EV — expected around 2028 — doesn't feel like a Ferrari, the scarcity premium could erode. Lucas: That's the next big test for the board. They've already signaled that the EV will be intentionally limited in volume and priced at the very top of the range. In other words, they're applying the same scarcity playbook to the electric era. Luna: I wonder if that will work. Other luxury EV makers like Rimac or Lotus are also playing the scarcity card. The field is getting more crowded. Lucas: It is. But Ferrari has something those brands don't: a 75-year history of making cars that appreciate in value. The board's job is to protect that history while navigating the future. So far, they've done it better than almost any other automaker's board. Luna: The lesson for other boards is pretty clear. If you want pricing power, you have to be willing to say no to growth. Lucas: Saying no is the hardest thing for a board to do. Ferrari's board has made it their core competency. And that's why a company that sells 14,000 cars a year is worth more than Ford or General Motors.