Latest / Boardroom Conversations with Fexingo: CEOs, Strategy, and Corporate Leadership Explained / How the Ferrari Board Protects Brand Exclusivity
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- Luna: So Lucas, you've driven past a Ferrari dealership, seen that one car in the window with a sold sign, and wondered: why don't they just make more? Lucas: Exactly. And that question gets to the heart of how Ferrari's board thinks. They deliberately produce fewer cars than the market demands. It's a governance-level commitment to scarcity. The board doesn't just approve a business plan—it enforces a ceiling on volume. Luna: I remember reading that after the 2015 IPO, analysts were pushing them to ramp up production. The board held firm. Lucas: Right. In fact, then-chairman Sergio Marchionne was very explicit. He said Ferrari would never produce more than ten thousand cars a year. Period. And they've stuck to that—even as waiting lists stretched to three years for some models. The board treats that production cap as a governance principle, not just a marketing tactic. Luna: It sounds almost anti-capitalist. Leaving money on the table. Lucas: But it's deeply capitalistic in a long-term sense. By limiting supply, Ferrari keeps resale values high—some models actually appreciate. That protects the brand's premium positioning. And the board knows that if they flood the market, the mystique evaporates. There's actually a famous phrase: 'one fewer than demand.' That's the operating philosophy. Luna: If today's conversation is changing how you think about brand governance, the way these episodes stay ad-free is through listener support. You can buy me a coffee dot com slash fexingo. It's a small gesture that keeps these deep dives going. Lucas: Yeah, and we genuinely appreciate it. So back to Ferrari—the really interesting part is how the board enforces that scarcity when the CEO has quarterly targets. Let's look at the Purosangue, their SUV. Luna: Oh, the SUV was a huge test for the board. Purists were furious. Lucas: But what's fascinating is that the board also capped production of the Purosangue at twenty percent of total output. They didn't just say 'yes, build an SUV'—they said 'yes, but only one in five cars can be that SUV.' That's a board-level constraint designed to prevent the SUV from becoming the brand. Because in luxury, the moment your volume seller defines the brand, you've lost exclusivity. Luna: So they're actively managing brand equity as a governance function. Lucas: Exactly. And that's rare. Most boards focus on financial metrics—revenue, margin, EPS. Ferrari's board explicitly manages brand perception as a balance-sheet asset. They have a committee, I think it's called the 'Brand and Heritage Committee,' that reviews every product decision through the lens of brand consistency. Luna: Was that always the case? Or did they learn it the hard way? Lucas: It's been a consistent thread for decades, but the 2015 IPO really codified it. Before the IPO, Ferrari was part of Fiat Chrysler. The board was smaller, more insular. After the spin-off, they added independent directors with deep luxury-goods experience. One key addition was Delphine Arnault, from the LVMH family. She brought firsthand knowledge of how to manage brand scarcity in fashion and accessories. Luna: So that luxury lens became institutionalized. Lucas: Right. And it shaped how the board handled the transition from Marchionne to John Elkann in 2018. When Marchionne died unexpectedly, Elkann stepped in as chairman. He's the heir to the Agnelli family, which controls Ferrari through Exor. The board could have pushed for a more aggressive growth plan. They didn't. Luna: Why not? Most new chairs want to make their mark. Lucas: Because Elkann and the board understood that Ferrari's value isn't in unit volume—it's in brand equity. So they kept the production cap, they invested in personalization programs—things like custom paint colors and interior leathers that push the average selling price higher without adding volume. The average Ferrari now sells for over three hundred fifty thousand euros. That's up significantly from pre ipo levels. Luna: So the board is actually managing price and exclusivity rather than volume. Lucas: Yes. And they're also very thoughtful about how they expand into adjacent categories. Ferrari licenses merchandise—apparel, accessories, even a theme park in Abu Dhabi. But the board keeps tight control over the licensing terms. They don't just slap the prancing horse on anything. Each licensee goes through a brand approval process. Luna: There's a famous story about the board rejecting a Ferrari-branded laptop. Lucas: I've heard that. The rationale was that a laptop ages quickly and cheapens the brand. Ferrari's board thinks in terms of product half-life. A car lasts decades, a watch lasts generations, a laptop is obsolete in three years. They said no. Luna: That's a really specific heuristic. 'If it depreciates fast, don't put our name on it.' Lucas: Exactly. And that kind of discipline comes from having a board that's aligned on what the brand stands for. One thing that helps is Ferrari's ownership structure. Exor, the Agnelli family holding company, controls about thirty percent of the equity but holds a majority of voting rights through a loyalty share structure. That gives the board a long-term horizon. Luna: So they're insulated from activist investors who want short-term growth. Lucas: Completely. In fact, when some hedge funds bought small stakes after the IPO and pushed for higher production, the board—backed by Exor—simply ignored them. They knew the activists would eventually sell. And they were right. The stock has more than tripled since the IPO, even with the production cap. Turns out, scarcity creates value for shareholders too. Luna: Let's talk about the board's role in CEO succession. That's always a tricky one for founder-led or family-controlled companies. Lucas: Ferrari has had three CEOs in the past fifteen years—Luca di Montezemolo, Sergio Marchionne, and now Benedetto Vigna, who took over in 2021. Each transition was handled differently. Montezemolo was the longtime chairman and CEO, very much the face of Ferrari. When he stepped down in 2014, the board brought in Marchionne, who was already CEO of Fiat Chrysler. That was a bold move because Marchionne was not a car guy in the traditional Ferrari sense—he was a turnaround specialist. Luna: But Marchionne was the one who took Ferrari public and enforced the ten thousand unit cap. Lucas: And he ran Ferrari with a very tight hand. The board gave him latitude because they trusted his strategic vision. Then after his death, the board had to move fast. They appointed John Elkann as interim CEO before settling on Louis Camilleri, who was the former CEO of Philip Morris. Camilleri served for three years, then retired unexpectedly. That's when they brought in Vigna, a tech executive from STMicroelectronics. Luna: Interesting. They chose someone with a semiconductor background, not automotive. Lucas: Because the board saw electrification as Ferrari's next big challenge. They needed a CEO who understood digital and software. Vigna's mandate is to launch Ferrari's first all-electric car, which is expected by 2027. The board is already thinking about how to electrify without losing the brand's soul. That means the electric car will likely be produced in even lower volumes than the V12 models, at least initially. Luna: So the scarcity principle extends to new technology. Lucas: Exactly. The board is applying the same governance logic. They're not going to mass-produce an electric Ferrari. They'll make it rare, expensive, and exclusive. That's what protects the brand. Luna: It seems like Ferrari's board has a really clear north star. Do you think other luxury companies could replicate this? Lucas: Some try. Hermès, for example, also limits production of its Birkin bags. But it's harder when you're publicly traded without a controlling shareholder. Ferrari's dual-class structure gives them cover. Most boards would cave under quarterly earnings pressure. Ferrari's board doesn't have to. Luna: So the lesson might be: if you want to govern for exclusivity, you need governance structures that protect you from short-termism. Lucas: That's the takeaway. Ferrari's board is a case study in aligning governance with brand strategy. They have the right ownership structure, the right committee focus, and the discipline to say no. And they've proved that less really can be more—for the brand and for shareholders.