Ferrari S.p.A.

Ferrari S.p.A.

Corso Marconi 10
Turin
Italy
011 39 11 65651
Ferrari North America Inc.
250 Sylvan Ave.
Englewood Cliffs, New Jersey 07632
U.S.A.
(201) 816-2600

Wholly Owned Subsidiary of Fiat S.p.A.
Sales:
Incorporated: 1960
Employees: 80
SICs: 5012 Automobiles & Other Motor Vehicles; 5013 Motor Vehicle Supplies & New Parts

Synonymous with speed and performance, Ferrari sports cars are among the most prestigious automobiles in the world, along with Porsche, Maserati, Alfa Romeo, Jaguar, and Lamborghini. The name Ferrari is still venerated on the international racing circuit, and many automotive experts regard the Ferrari GTO as one of the most exotic sports cars ever made. Only 35 Ferrari GTOs were built, and some of them have been sold as collectors’ items for more than $10 million.

The company’s founder, Enzo Ferrari, was born in 1898 in Modena, Italy, to a lower-middle-class family. Lacking a formal education, he was given the job of shoeing horses for the Italian Army during World War I. After the war, he traveled to Turin and applied for work at Fiat, already one of the most prominent automobile manufacturers in Europe. Unceremoniously rejected, Ferrari nurtured a grudge against Fiat that developed into a driving ambition. Determined to break into the automotive industry, Ferrari began to frequent the bars and cafes around Turin where famous race car drivers sought their entertainment. In one of these bars Ferrari met Ugo Sivocci, a test driver for a new automobile manufacturer named Costruzioni Meccaniche Nazionalia (CMN). Sivocci hired Ferrari as his assistant and the young man competed in his first race in October 1919.

Ferrari did not remain with CMN for very long, and soon joined Alfa Romeo, located in Portello on the outskirts of Milan. Founded in 1909 by Cavaliere Ugo Stella, Alfa manufactured a line of automobiles and sponsored cars for the racing circuit. Ferrari was hired by Alfa Romeo as a test driver, and was also contracted by the company to sell its cars. During the early 1920s Ferrari crisscrossed the Italian roads between Milan and Turin selling automobiles, buying parts, delivering new cars to wealthy customers, spying on Fiat, and racing Alfas.

During these years Ferrari earned his laurels as a race car driver. In 1923 he won the Chilometro Lanciato at Geneva, the Circuito del Polesine at Robigo, and the annual race at Ravenna. In 1924 he won the Pescara, run on the Adriatic coast. The death in 1925 of popular Antonio Ascari, Alfa Romeo’s premier driver, led the company to cancel all racing competition out of respect for the fallen employee. Disappointed that his own racing career was interrupted, Ferrari redirected his energy and focused on developing his distributorship for Alfa Romeo. By the end of 1925, Ferrari had expanding his holdings into a large dealership and service center. By 1927 he was behind the wheel of a racing car once again, and won the Modena race and the Circuito di Alessandria that year. In 1928 Ferrari repeated as champion in both of these races.

As Alfa Romeo’s fortunes declined during the late 1920s and early 1930s, it was taken over by the Istituto di Ricostruzione Industríale (IRI), a government organization formed to assist companies experiencing financial difficulties. As a consequence of this takeover, Alfa Romeo withdrew its direct involvement from the racing car circuit, except for the international Grand Prix races. Ferrari, however, was not to be denied, and, parlaying his contacts with the Americans at Shell Oil, the Germans at Bosch ignition systems, and his fellow Italians at Pirelli tires, he formed the Societa Anónima Scuderia Ferrari, a stable of racing cars and drivers dedicated to furthering the sport of competitive racing. Ferrari promised his fellow investors that his operation would not only buy and race cars, but also build high-performance automobiles for the sports car enthusiast some time in the future. Alfa Romeo contracted the new Scuderia to act as its official representative in some races.

With the increasing strength of the Facist Party under the leadership of Benito Mussolini during the 1930s, Ferrari decided to become a member of the Facist Party. His association with the Fascists dovetailed with his ambition to run Alfa Romeo’s racing program, which, of course, was operating under the auspices of the government-controlled IRI. Ferrari’s ambitions were frustrated, however, with the arrival of Wifredo Ricart, a Spanish engineer hired by IRI to revitalize Alfa Romeo and return the company to the winner’s circle on the competitive race car circuit. Ferrari’s personal dislike of Ricart was evident from the beginning, but increased dramatically when he discovered that Ricart was behind Alfa Romeo’s decision to buy 80 percent of the Scuderia Ferrari and return administration of the racing program to the company’s office in Portello. With acrimony and bitterness compounded during every meeting between the two men, and after a particularly unpleasant exchange in which Ricart likened himself to a genius, Ferrari decided it was best to end his association with the Spanish engineer and Alfa Romeo.

Ferrari’s parting agreement with Alfa Romeo stipulated that he could neither use the name of Scuderia Ferrari nor engage in racing for four years. For this, he received a generous severance package, and wasted no time in establishing Auto Avio Costruzione, a custom machine shop that initially manufactured small aircraft engines for planes. The famous Ferrari symbol of the prancing horse first appeared during this time on company letterhead and marketing brochures. With Italy’s entry into World War II in 1940, Ferrari’s factory was soon producing machine tools for the Axis armies, including sophisticated hydraulic grinders. Although his company profited from its association with the Axis Powers, Ferrari was impatient because the war years interrupted international motor racing.

After the war, Ferrari was approached by a group of car enthusiasts who convinced him to manufacture the 125, a new car for the racing circuit. In March 1947, the prototype 125 took its initial test drive, and later in the year entered and won the Circuito del Valentino in Turin before the wealthy and elite of Italian society. Soon after the race, such dignitaries as Count Bruno Sterzi and Count Soave Besana of Milan and the Russian Prince Igor Troubetzkoy (husband of Barbara Hutton, the heiress to the Woolworth fortune) were knocking on Ferrari’s door in Modena to purchase his cars. By December, Enzo Ferrari was manufacturing a limited number of high-performance sports cars. Ferrari’s first cars, such as the Tipo 166 Spider Corsa, were triple-purpose vehicles. They could be used as sports cars on the public road, as competitive sports cars in races such as the Mille Miglia, and as entries in Formula Two racing events (with fenders and other equipment removed).

By the summer of 1948, Ferrari’s automobile designers had completed work on a non-racing car. This gran turismo automobile would be made with windows, heaters, a top, and leather upholstery. Each car body was to be hand-made by artisans with traditionally exquisite Italian styling and craftsmanship, and delivered to distributors in batches of less than ten automobiles at a time. When the car was finally delivered, the customer would have the final decision regarding paint color, upholstery, and external trim. Until Ferrari was taken over by Fiat in 1969, all cars made by the company were manufactured by this method and, hence, no two cars were identical.

During the early 1950s, Ferrari cars were ordered by the international elite, including the Aga Khan, King Leopold of Belgium, the Shah of Iran, Juan Perón, Crown Prince Faisal of Saudi Arabia, and members of both the Dulles and Du Pont families. The company listed dealer franchises in London, Rome, Zurich, Algiers, Casablanca, Melbourne, Florence, Brussels, Montevideo, Sao Paulo, Paris, and New York. Although Ferrari engines were temperamental and frequently overheated, the combination of their nastiness with their brilliant body work and designs created an unparalleled mystique. Alfa Romeos, Maseratis, and Jaguars seemed to pale in comparison.

Despite the growing success of his commercial enterprise, Ferrari remained obsessed with racing, with most of the money he earned from selling sports cars in Europe and America used to fund the annual Grand Prix and Formula One races. The fortunes of race car sponsors are volatile, however: in 1952 cars designed and manufactured by Ferrari won 16 of the 17 races the company had entered; in 1957, Ferrari won only a few of the numerous races on the international circuit. Nevertheless, by the end of the 1950s Enzo Ferrari had become a national institution in motor racing, a kind of quasi-official representative of the Italian nation in every race. Ferrari began to believe the press reports about his responsibility in carrying Italy’s banner in international racing, and devoted more and more time to his racing team. While most Italians celebrated Christmas and Easter Sunday, Ferrari was conducting business to improve his chances of winning the next race.

In 1960 the firm was restructured as a public corporation under the name Societa Esercizio Fabbriche Automobili e Corse Ferrari. Approximately 40 percent of all Ferrari cars were exported to North America, primarily for the American market. The cars were stripped down and detuned versions of the company’s racers, and even though the money made from selling these automobiles to wealthy Americans allowed Ferrari to pursue his motor racing dreams, Ferrari was indifferent to almost every aspect of the manufacturing process.

Ferrari made it known in the industry that he wanted a large firm to take over the administration and management of his factories so he could devote all his energy to racing, and in the early 1960s, Ford Motor Company made overtures to the Italian car maker. In return for rights to the Ferrari name, trademark, patents, future technical developments, and 90 percent of the company’s stock, Ford agreed to purchase the sports car manufacturer for $18 million. The acquisition of Ferrari by Ford developed into a national issue, with the Italian press leading the opposition to the deal as a matter of national honor. Negotiations proceeded smoothly until Ferrari insisted on maintaining complete control over the racing operation. Ford executives balked and could not accept a completely independent operation working within the organization. The deal between Ford and Ferrari, which appeared so promising, was suddenly canceled.

Sports car manufacturers such as Porsche, Jaguar, and the brand new Lamborghini began to chip away at Ferrari’s market in both Europe and America, and the grand master’s continued indifference to passenger-car production at his own firm finally took its toll: the designs of 330GTs, 275GTBs, and other models were downright ugly, and production was shoddy. Car bodies were inclined to rust easily and component parts were badly or cheaply tooled. American distributors soon discovered that the Ferrari sports cars of the late 1960s were almost impossible to sell. Between 1968 and 1969, car sales dropped from 729 to 619 units. Lacking funds for expansion, and with Ferrari’s insistence on competing in many races at once rather than concentrating his limited resources on, for example, the Formula One competition, the company began to suffer financially. Yet Ferrari himself was a prisoner of his own public image—he was the focal point, the icon, of a nation hungry for respect in the international community. Ferrari realized that massive amounts of money were required for the company to survive, so he turned to Fiat for help. Since Ferrari had harbored such a lifelong dislike of Fiat, it was an ironic turn of events.

On June 21, 1969, Fiat purchased Ferrari for $11 million. According to the terms of the agreement, Fiat gained 40 percent of Ferrari stock and would manage the passenger car operation, while Ferrari himself retained 49 percent of the stock and complete control over the motor racing operation. Fiat immediately took over the daily administration of designing, manufacturing, marketing, and selling Ferrari’s road cars, and invested millions in modernizing the company’s factory and expanding its production. By 1970, under the new Fiat management, production of Ferrari passenger cars had increased to over 1,000, and by the end of the decade production has reached the 2,000 mark. Fiat doubled the size of the Ferrari factory and was committed to making Ferrari cars the focus of its international marketing.

During the 1970s and 1980s, the collection of Ferrari automobiles by car enthusiasts reached the intensity of a quasi-religious experience. Americans and Europeans alike paid enormous sums of money for the older Ferrari racing machines, and one Frenchman even converted his entire 375-acre estate outside Paris into a shine for Ferrari automobiles. Enzo Ferrari was not the slightest bit interested in the deification of his cars and, more often than not, displayed contempt for the individuals who bought Ferrari cars as a status symbol. After selling the passenger car operation to Fiat, for nearly two decades the old man remained engrossed by the fortunes of his racing team. When Enzo Ferrari died on August 15, 1988, the Italian population went into mourning. The last of the automotive giants had passed away. Shortly after his death, Fiat management announced that the Ferrari factory works would increase production, and that the last remnants of handcrafted car production would be gradually phased out.

With the financial backing of Fiat, Ferrari had attempted to increase its presence in the American market during the early and mid-1990s, in part by sponsoring races for owners of Ferrari 348 sports cars. Reviving Ferrari’s image as a racing machine has been effective, with many new customers willing to invest the money needed to modify their cars for the racing circuit. In 1994 sales of Ferrari cars in the United States alone shot up 20 percent. As the company unveiled its new Spider convertible on fashionable Rodeo Drive in Beverly Hills, California—in the first premier of a Ferrari car in the United States—Fiat had high expectations that American customers would once again be captivated by the mystique of Ferrari sports cars.

Further Reading

Henry, Jim, “Car Sales Are the Big Prize in Ferrari Race Series,” Automotive News, July 11, 1994, p. 34.

_____, “Fiat Gives U.S. More Attention,” Automotive News, March 15, 1993, p. 6.

Yates, Brock, Enzo Ferrari: The Man, the Cars, the Races, the Machine, New York: Doubleday, 1991.

—Thomas Derdak