Unless you have been living in a cave the last two years, you know that Porsche’s strong financial position has allowed them to make a gradual play for VW’s shares. In fact it is just the latest in what has been a long-time partnership between the two + Audi. You may recall that many years ago Audi+Porsche dealerships often shared the same building.

But what we really didn’t know until recently was how Porsche might use VW in their product portfolio. Remember that the VW Touareg , Audi Q7, and Porsche Cayenne share the same platform. The benefit being significantly cheaper development costs. Bear in mind that Porsche has had a benefit in this partnership of releasing their Cayenne before VW and Audi have released their products. Ironically, it is the smashing success of the Cayenne product line that has given Porsche the ability to launch a takeover of VW.

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Are Ferrari and most other supercar makers immune to economic recession? That was the question that everyone wanted an answer to because the “just how bad is it?” gets answered when we financial figures.

Ferrari released this press statement verbatim on October 27:

“Maranello, October 27th, 2008 - The Board of Directors of Ferrari SpA met today under the chairmanship of Luca di Montezemolo, to examine the third quarter results. Ferrari recorded 450 million in revenues (up 22.3 percent year-over-year), and a trading profit of 79 million (17.6 percent of revenues), up 41.1 percent from the 56 million figure (15.2 percent of revenues) for Q3 2007.
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How pleased Lamborghini must be that it’s latest supercar, the Murciélago LP640 has just co-starred with Cristian Bale in the latest Batman flick, the Dark Knight. Who knows if Lambo paid dearly for the product placement, but a 155+ million dollar opening weekend is sure to get them a ton of free advertising.

Auto companies are masters at product placement.

A few examples:

• Ferrari - Ferris Bueller’s Day Off. Matthew Broderick steals his friend’s father’s 250 GT California.
• Porsche - Tom Cruise drives a 928 into Lake Michigan (oops!)
• Dodge Challenger - Vanishing Point’s star car gets driven into 2 bulldozers at high speed. Big crash!

Tons of other examples exist, I am sure someone will point out the cars from Bullitt and Miami Vice, too…

Look for the ultra-exclusive Lamborghini Reventón to appear in a yet-to-be-determined film sometime soon!

This week’s Link of the Week is pretty cool. Because of their rarity, non-millionaire fans of supercars can often find it difficult to get behind the wheel of the world’s flashiest and fastest cars. Even millionaires find it difficult to choose with a record number of supercars available for public consumption.

If you’ve ever wanted to spend the day “testing” a variety of supercars at supercar speeds, there’s a new option for you. 

It’s called Supercar Life.

The LA Times has written about the program here: http://www.latimes.com/classified/automotive/highway1/la-fi-garage26apr26,0,4314202.story

Times are good for Ferrari’s motorcar division. The Italian company promotes its motorcars predominantly through motor sports - and it seems to be paying off. Ferrari is not the only carmaker with a waiting list. Bugatti and Lamborghini have both stated in the past that their wait lists are over 12 months.

Ferrari GB has reported a full order book for between 12 months and three years depending on model.

In 1992 the company sold just 128 cars in the UK. In 1997 the figure had increased to 410 and last year sales totalled 699 Ferraris.

Although small numbers by most manufacturers standards, the UK market is Ferrari’s third most important after the United States and Germany.

Massimo Fedelli, managing director of Ferrari GB, said: “In many respects Britain is Ferrari’s most important territory. It’s the world’s leading financial centre and is probably the most important market from both a commercial and a media point of view. To succeed we need to understand the British consumer, because you’re very demanding, with the highest expectations when it comes to sales and service.”

Despite economic uncertainty he is upbeat about the prospects of the luxury car market over the next 18 months. Mr Fedelli said: “Britain will remain a point of reference for the rest of the world. It attracts wealth and rich people come here to spend their money, so no matter what happens with the economy, I believe the UK market will remain strong for brands like ours.” (The Times: February 14).

Ferrari recently announced that all of their models will come with Ceramic disc brakes as standard equipment from 2008. This is great news for Ferrari buyers as a once $10,000 optional extra is now standard. These disc brakes have, for a few years now, been a very expensive add-on, but a very good one as they nearly eliminate brake fade, and very lightweight, and work to reduce stopping distances - critical in preventing auto accidents.
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Well, Michael Schumacher has only been “retired” for one season from the Ferrari F1 progam, but with his participation in an upcoming motorsports event in Barcelona, and Ferrari’s Jean Todt stating that Schumi is more than welcome to return whenever, one can only speculate.

Read more below:

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Enjoying paying US$3+ for that gallon of gas? Didn’t think so. But don’t worry the Middle Easterners are more than happy to sell your their pricey car juice. And they’ll use it to buy themselves a Ferrari! Super!

Article Here

Aston Martins, Ferraris, and Lamborghinis are selling like hot cakes in the land of sand, so get yours before the list gets too long…

Photo courtesy Ferrari.

The BBC recently reported that British Prime Minister Tony Blair and F1 racing legend Michael Schumacher have been talking. The two want to but an end to crashes that result in highway deaths. Traffic deaths kill more young men than any other cause, except HIV/AIDS.

To put the problem in perspective, the BBC notes that 1,200,000 people are killed each year in traffic accidents. Of those, 400,000 are under 25 years of age. 66,000 people are seriously injured in traffic accidents every day as well. In Africa, BBC claims that 70% of the children injured are providing the main source of income for the family. Such injury can be devastating to the injured and those dependent upon the income.

Photo courtesy BMW.

Schumacher proposes the “Make the Roads Safe” campaign. Aside from the obvious goal, the aim of the summit/conference/meeting/rendezvous would to bring nations together to enact legislation and program that would decrease the accident rate.

At BTKM, we think that specific objectives should be laid out. This could include:

1) Mandatory training for all drivers. Even experienced drivers could benefit from additional training. Take the U.S. for example, where virtually no Americans are trained to drive at speeds in excess of 75 miles per hour. In such instance, the real danger is not the speed it is the inability of the driver to cope with the speed and anticipate and react to problems in the road ahead.

2) Mandatory testing. Drivers of all ages, whether they are 16, 66, or 106 years of age should go through specific and credible testing every other year. This assures that the drivers continue forth in good health and well being towards other drivers.

3) Improved awareness and engineering at car markers. All automakers must be aware of the need to improve safety to the public on both sides of the windscreen. Government must work to encourage companies to build safer cars. In addition, government must provide encouragement and incentive to buy newer cars, which are safer and which must be equipped with passive and active safety devices.

4) All cars currently on the road must go through tedious and complete checks to determine car safety. This would include visual and mechanical inspection by approved departments of motor vehicles safety in the respective localities. Cars failing to meet these strict requirements shall required to be fixed, updated, or removed from road use.

5) Governments must provide assurance that all roads are properly maintained and made safe. Roads being build or refurbished for future use shall be capable of holding cars traveling at distances in excess for 155 miles per hour.

6) All governments and automakers should meet annually to discuss improvements to the regulations. Audits should be conducted in all localities annually to assure compliance with regulations set forth at the summits.

This may not be the end all, be all of road safety but there is no doubt that with the enactment of these rules alone, fatalities and serious injury on roads can be significantly reduced. We will never be able to eliminate all road deaths but prudent and reasonable resolutions like the ones outlined below can lead to better prevention.

Source:
http://news.bbc.co.uk/1/hi/uk/6583151.stm

In our most recent posting we pointed out that Aston Martin was integral to Ford’s Premier Auto Group, not just because it represented Ford’s presence in the supercar market, but because it was also profitable.

Profitability is something that once eluded supercar makers such as Aston, Ferrari, and Lamborghini, even Porsche at times. We noted that Aston Martin is, according to Ford, now a profitable unit. As Ford does not publish profitability for each of the PAG’s units, we will have to take their word for it, but we do know they sold over 5000 cars in 2006.

Take a look at Lamborghini, which according to the company, pretax profits rose to €18.1 million in 2006. That’s a 4.5-fold increase from 2005 when profits were only €4.4 million. CEO Stephan Winkelmann has said, “We have a complete model range, which is the youngest we’ve ever had. We are now a real car manufacturer.” While the “real-ness” of Lamborghini’s product line may be debatable, they do have 10-cylinder and 12-cylinder models, the Gallardo and Murciélago, respectively. Both models feature a coupe and roadster version.

Part of this increase has been due to higher demand and production. In 2000, Lamborghini produced just 1 car per day, but in 2006 they had ramped up to 13 per day. This figure is still more than a bit shy of Porsche, but respectable for considering competitor Pagani has said it will make only about 20 cars for the year.

Doing very simple math, without consideration for one time write offs/sales, we can note the following per car sales for 2006:

Manufacturer	Profit (pretax)	Production (# of cars produced)	Per car profit
Lamborghini	€ 18,000,000	2095	€ 8,591.89
Ferrari	€ 183,000,000	5671	€ 32,269.44
Aston Martin	N/A	5000	N/A
Porsche	€ 1,390,000,000	86426	€ 16,083.12

Porsche is the most profitable auto manufacturer in Europe, but per car averages put Ferrari impressively on top. Aston Martin and Pagani do not post numbers officially, but Aston reports a profit, however small that may be. Bottom-line, money CAN be made in supercars!

Sources:

Bloomberg http://quote.bloomberg.com/apps/news?pid=10000080&sid=aLQlMBk2X4yM
Lamborghini
Ferrari
http://www.automotoportal.com/article/ferrari-annual-report-2006-impressive-growth-in-revenues-and-profits
http://www.autoblog.com/2006/07/04/aston-martin-makes-a-profit
Aston Martin
http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article681820.ece
Porsche
http://www.iht.com/articles/2006/11/15/bloomberg/bxporsche.php

Our friends at Winding Road magazine recently spent the time and money to go to the Geneva Motor Show, one of the top motor shows in the world. Where there, they spotted the all-new Ford Mondeo.

We noted some months ago that Ford was opting not to sell their hot hatchback Ford Focus ST and Ford Focus RS in the USA, a market that craves large engines and fast cars. It is no wonder Ferrari’s number one market is the gas-guzzling American market. The Mondeo is no gas-guzzler. It is a well-designed and well-engineered family sedan, much like the Fusion in the American market. But make no mistake, it is most definitely not the Ford Fusion. What this represents is a poor marketing effort on the part of Ford Motor Company. It also signifies a synergy lost in a global company. Ford could save money by eliminating the Fusion and using the Mondeo in the USA. A smart move, but instead the company struggles and has to sell of its profitable Aston Martin division, and brand that did not fit into the streamlined strategy of the future Ford PAG.

The conclusion is that we should not be surprised about this ill-advised move considering they have brought back the Taurus name – a name synonymous with boring sedans.

Source:http://news.windingroad.com/countriesmarkets/euro/geneva-motor-show-ford-mondeo-launches-and-we-wish-it-was-our-fusion/

Maybe ING saw our posting and saw the benefit of a sponsorship with the Renault Formula 1 team. Maybe they are just making too much money and need to “make an investment.” Either way the Dutch Banking and Insurance giant has signed a 3-year deal with team Renault for some prime ad space, and name sponsorship, on the next series of cars.

It is quite clear that Formula One reaches far more people than NASCAR in the US or GT racing in Europe. Despite running 2007 sans Fernando Alonso (two-time F1 champion), Renault has a full-sponsorship. ING CEO Michel Tilmant is right to think that F1 is an opportunity to build the ING brand globally in a quick way. The Shell-Ferrari relationship is a similar example.

Lessons in brand management that when you spend marketing dollars, they should be spent to gain positive exposure for the brand. The idea is to associate the brand with a winning concept. Renault has certainly proven itself a winner the last two years. It is estimated that the contract was equivalent to 5% of ING’s global marketing budget. We estimate that such a deal is worth over $85 million per annum.

One final note: our earlier analysis stated that sponsorship opportunities would come as a result of big tobacco being forced out of F1 racing in most countries. That foresight has proven correct as ING will replace a number of previous Renault sponsors, including Japanese Tobacco.